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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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    Citations

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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, vol. 11(22), pages 1-34, November.
    2. Udi Joshua & Festus V. Bekun & Samuel A. Sarkodie, 2020. "New Insight into the Causal Linkage between Economic Expansion, FDI, Coal consumption, Pollutant emissions and Urbanization in South Africa," Working Papers 20/011, European Xtramile Centre of African Studies (EXCAS).
    3. Lukman A. Olorogun, 2024. "Modelling Financial Development in the Private Sector, FDI, and Sustainable Economic Growth in sub-Saharan Africa: ARDL Bound Test-FMOLS, DOLS Robust Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8416-8434, June.
    4. Ayhan Tecel & Salih Katircioğlu & Elham Taheri & Festus Victor Bekun, 2020. "Causal interactions among tourism, foreign direct investment, domestic credits, and economic growth: evidence from selected Mediterranean countries," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 19(3), pages 195-212, September.
    5. Ha, Le Thanh, 2022. "Effects of digitalization on financialization: Empirical evidence from European countries," Technology in Society, Elsevier, vol. 68(C).
    6. Hui Wang & Huifang Liu, 2017. "An Empirical Research of FDI Spillovers and Financial Development Threshold Effects in Different Regions of China," Sustainability, MDPI, vol. 9(6), pages 1-21, June.
    7. Yilmazkuday, Hakan & Akay, Koray, 2008. "An analysis of regime shifts in the Turkish economy," Economic Modelling, Elsevier, vol. 25(5), pages 885-898, September.
    8. Wang, Wencheng & Ning, Zinan & Shu, Yang & Riti, Miriam-Kamah J. & Riti, Joshua Sunday, 2023. "ICT interaction with trade, FDI and financial inclusion on inclusive growth in top African nations ranked by ICT development," Telecommunications Policy, Elsevier, vol. 47(4).
    9. Udi Joshua & Oladimeji M. Salami & Andrew A. Alola, 2020. "Toward the path of Economic Expansion in Nigeria: The Role of Trade Globalization," Working Papers 20/009, European Xtramile Centre of African Studies (EXCAS).
    10. Lukman Ayinde Olorogun, 2022. "Revisiting the Nexus of FDI-Led Growth Hypothesis and Economic Development in Rwanda: a Johansen-ARDL Approach to Cointegration," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2695-2717, December.

    More about this item

    Keywords

    financial development; FDI; real income; second generation econometrics; Turkey;
    All these keywords.

    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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