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The impacts of financial development on growth:A time-varying causality analysis for Turkey

Author

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  • Mehmet Zeki Ak

    (Faculty of Political Sciences, Sakarya University, Sakarya, Turkey)

  • Mustafa Kirca

    (Institute of Social Sciences, Anadolu University,Eskiºehir, Turkey)

  • Mehmet Nurullah Altintaº

    (Faculty of Political Sciences, Sakarya University, Sakarya, Turkey)

Abstract

The goal of this research is to determine whether the causal relationship between financial development and economic growth in Turkey is stable over time. For this purpose, causal relationship between financial development and economic growth in Turkey has been investigated by means of annual data for the period of 1960- 2013. Differently from previous studies in the literature, considering that causal relationship between financial development and economic growth might change depending on time, time-varying causality test developed by Balcilar, Ozdemir and Arslanturk (2010) has been used. The results show that there is a unidirectional causal relationship from financial development to economic growth and this relationship changes depending on time. It is seen that unidirectional causality from financial development to economic growth emerged during the periods of financial turmoil and political crisis. The basic conclusion is that there is no stable causal relationship between financial development and economic growth in Turkey over the given time period.

Suggested Citation

  • Mehmet Zeki Ak & Mustafa Kirca & Mehmet Nurullah Altintaº, 2016. "The impacts of financial development on growth:A time-varying causality analysis for Turkey," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 34(2), pages 529-554.
    • Handle: RePEc:rfe:zbefri:v:34:y:2016:i:2:p:529-554
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    References listed on IDEAS

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    2. Abar Hayri, 2022. "An analysis of causal relationship between economic growth and financial development for Turkey: A MODWT—Granger causality test," Economics and Business Review, Sciendo, vol. 8(3), pages 59-81, October.
    3. Amira Akl Ahmed, 2018. "Bank-Based Financial Development and Economic Growth: Time-Varying Causality Analysis for Egypt," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(4), pages 123-135, April.

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    More about this item

    Keywords

    financial development; growth; time-varying causality;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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