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Financial Development and House Prices in Turkey

In: Contemporary Issues in Social Science

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  • M. Ozan Yildirim

Abstract

Introduction: Financial development has a direct impact on the housing market by facilitating access to credit. The increase in housing loans resulting from the relaxation of the credit constraint causes an increase in housing demand and house prices.Purpose: This study aims to examine the relationship between financial development and house prices in Turkey, using the variables: the domestic credit to the private sector and total housing and consumer credits.Methodology: To determine any long-run relationship between financial development and house prices, the autoregressive distributed lag methods are used, covering the selected variables such as real GDP, inflation, mortgage interest rate, and stock price from 2010Q1 to 2020Q2.Findings: The study’s findings show that both variables representing financial development have a statistically significant and substantial positive effect on house prices. Besides, the selected macroeconomic variables have the theoretically expected impact on house prices.

Suggested Citation

  • M. Ozan Yildirim, 2021. "Financial Development and House Prices in Turkey," Contemporary Studies in Economic and Financial Analysis, in: Contemporary Issues in Social Science, volume 106, pages 205-220, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:csefzz:s1569-375920210000106013
    DOI: 10.1108/S1569-375920210000106013
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    More about this item

    Keywords

    financial development; house prices; housing loans; bank credits; Turkey; cointegration; B26; C22; E51; R21; R31;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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