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Financial Liberalization in Turkey: Why Was the Impact on Growth Limited?

Author

Listed:
  • Fatih Özatay
  • Güven Sak

Abstract

This study shows that the financial reform process, which started in 1980, considerably deepened the financial system. However, the impact of this deepening on credit growth was extremely mild, if not insignificant. We further show that the growth of credit stock, not the deepening of the financial system as measured by the growth of total liabilities of the banking sector, influences economic growth. The reform period can be identified by an increase in the level of riskiness. Without attempting to explain the reasons behind the environment of increased riskiness, we show that the ratio of credit to liabilities was adversely affected by this environment.

Suggested Citation

  • Fatih Özatay & Güven Sak, 2002. "Financial Liberalization in Turkey: Why Was the Impact on Growth Limited?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 38(5), pages 6-22, October.
    • Handle: RePEc:mes:emfitr:v:38:y:2002:i:5:p:6-22
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    Citations

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    Cited by:

    1. repec:ire:issued:v:22:n:01:2019:p:85-110 is not listed on IDEAS
    2. Kar Muhsin & Peker Osman & Kaplan Muhittin, 2008. "Trade Liberalization, Financial Development and Economic Growth in The Long Term: The Case of Turkey," South East European Journal of Economics and Business, Sciendo, vol. 3(2), pages 25-38, November.
    3. Sulaiman T. Al-Abduljader, 2019. "Interdependence of Securitized Real Estate in Frontier Markets," International Real Estate Review, Global Social Science Institute, vol. 22(1), pages 83-108.
    4. Fatih Özatay, 2016. "Turkey’s Distressing Dance With Capital Flows," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(2), pages 336-350, February.

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