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Finance, Instability, Debt and Growth: The Turkish Case, 1980-2010

Author

Listed:
  • Mustafa İsmihan

    (Atilim University)

  • Burcu Dinçergök

    (Atilim University)

  • Seyit Mümin Cilasun

    (Atilim University)

Abstract

Empirical results on the link between financial development and economic growth is mixed in Turkey. However, existing studies did not take into account the fact that Turkey has experienced endemic political and economic instabilities over extended periods. As a consequence of such instabilities, Turkish economy has shown frequent growth accelerations and collapses. Moreover, Turkish banking sector preferred to finance public borrowing rather than lending to the private sector due to the prevalence of high real interest rates on government bonds particularly during the 1990s. This study, therefore, aims to analyze the role of overall macroeconomic instability and public borrowing on finance-growth nexus in Turkey by using time series econometric techniques over the 1980-2010 period. After taking into account the effects of overall instability and public borrowing, we found a significant finance-growth link.

Suggested Citation

  • Mustafa İsmihan & Burcu Dinçergök & Seyit Mümin Cilasun, 2013. "Finance, Instability, Debt and Growth: The Turkish Case, 1980-2010," EY International Congress on Economics I (EYC2013), October 24-25, 2013, Ankara, Turkey 271, Ekonomik Yaklasim Association.
    • Handle: RePEc:eyd:cp2013:271
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    References listed on IDEAS

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    Cited by:

    1. 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.

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    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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