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Political Stability and Financial Development: Evidence from Turkey

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  • Zehra DOÄžAN ÇALIÅžKAN

Abstract

The interaction between political decisions and economic indicators constitutes the main subject of political economy and it surfaces the performance that policymakers display in the point of the solution of economic problems. In other words, the most significant results of political decisions have been seen in the field of economy. In this regard, the stability of political decisions and the existence of political stability which is defined as political order affect economic order, development and stability as well. The economic stability that affects the welfare level of one country have several determinants like the macroeconomic indicators such as general level of prices, rate of employment, level of production and balance of payments, and the continuity of political order, the size of military power, corruption, accountability in politics, political transparency and fair distribution of income. In this study, on the other hand, how political stability affects financial development in the field of economy has been researched. For that purpose, Granger causality test has been applied for Turkey by using the data of financial development and political stability belonging to the years of 1970- 2017. In the result of analysis, a long-termed relationship between financial development and political stability was discovered and a causality from financial development to political stability was discovered as well.

Suggested Citation

  • Zehra DOÄžAN ÇALIÅžKAN, 2019. "Political Stability and Financial Development: Evidence from Turkey," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 3.
    • Handle: RePEc:fis:journl:190305
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    References listed on IDEAS

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    1. Feng, Yi, 1997. "Democracy, Political Stability and Economic Growth," British Journal of Political Science, Cambridge University Press, vol. 27(3), pages 391-418, July.
    2. Campos, Nauro F. & Karanasos, Menelaos G. & Tan, Bin, 2012. "Two to tangle: Financial development, political instability and economic growth in Argentina," Journal of Banking & Finance, Elsevier, vol. 36(1), pages 290-304.
    3. Roe, Mark J. & Siegel, Jordan I., 2011. "Political instability: Effects on financial development, roots in the severity of economic inequality," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 279-309, September.
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    Keywords

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    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

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