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Revisiting the nexus between financial development, FDI, and growth: New evidence from second generation econometric procedures in the Turkish context

Author

Listed:
  • Hasan Güngör

    () (Eastern Mediterranean University Department of Banking and Finance of Faculty of Business and Economics, Famagusta, North Cyprus, Turkey)

  • Salih Turan Katircioglu

    () (Eastern Mediterranean University Department of Banking and Finance of Faculty of Business and Economics, Famagusta, North Cyprus, Turkey)

  • Mehmet Mercan

    () (Hakkari & Adnan Menderes Universities, Hakkari, Turkey)

Abstract

This study investigates the impact of the selected financial development proxies and foreign direct investment (FDI) on the growth in the case of Turkey, using annual data for the 1960–2011 period. The second-generation econometric procedure has been applied for the first time to the Turkish data with this respect. Unit root tests by Carrion-i-Silvestre et al. (2009) assume that real income, financial development proxies, and FDI are non-stationary at levels, but become stationary at first differences through multiple structural breaks. Cointegration results by Maki (2012) confirm the existence of a long-term equilibrium relationship between real income growth, financial development, and FDI, again through multiple structural breaks. Finally, this paper confirms that financial development and FDI are long-term drivers of real income, which enable it to react to its long-term path significantly.

Suggested Citation

  • Hasan Güngör & Salih Turan Katircioglu & Mehmet Mercan, 2014. "Revisiting the nexus between financial development, FDI, and growth: New evidence from second generation econometric procedures in the Turkish context," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(1), pages 73-89, March.
  • Handle: RePEc:aka:aoecon:v:64:y:2014:i:1:p:73-89
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    Cited by:

    1. Dillip Kumar Das, 2019. "Exploring Perspectives of the Information Technology Industry in a South African City," Sustainability, MDPI, Open Access Journal, vol. 11(22), pages 1-34, November.
    2. Hui Wang & Huifang Liu, 2017. "An Empirical Research of FDI Spillovers and Financial Development Threshold Effects in Different Regions of China," Sustainability, MDPI, Open Access Journal, vol. 9(6), pages 1-21, June.

    More about this item

    Keywords

    financial development; FDI; real income; second generation econometrics; Turkey;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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