Finance growth nexus following the 2001 crisis in Turkey
Author(s)
Advisor
Böke, Selin SayekDate
2012Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
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Abstract
Diverse economic growth rates of countries have engaged the attention of
economists. Recently, researchers have studied the role of financial development to
explain the cross-country differences in growth. In particular, the direction of
causality between financial sector development and economic growth has been
analyzed in the context of two conflicting hypotheses. According to supply-leading
hypothesis financial development leads to economic growth, however demandfollowing
hypothesis claims that the direction of the relationship runs from
economic growth to financial development. Beside these two competing
hypotheses, bi-causality between economic growth and financial development has
been argued in the literature as well. This paper examines the causal relationship
between financial development and economic growth in Turkey for the period
2002:1-2011:2, using the technique of Granger causality. Our model reveals that
there is a bidirectional long run relationship between the economic growth and
banking sector development. On the other hand, the long run causality between the
stock market development and economic growth is from stock market development
to economic growth.