THE CASE OF TURKEY IN SEARCH OF THE NEW ASPECTS OF FINANCIAL DEVELOPMENT: ECONOMIC GROWTH RELATIONSHIP
THE CASE OF TURKEY IN SEARCH OF THE NEW ASPECTS OF FINANCIAL DEVELOPMENT: ECONOMIC GROWTH RELATIONSHIP

Summary/Abstract: This study was conducted to determine the relationship between economic growth and financial development in Turkey for the period 1998:Q1 to 2021:Q1. For this purpose, following traditional practices, economic growth is monitored using the real gross domestic products’ changes. Financial development(FD) of Turkey’s monitored by using two aspects of financial development that are found equally important. These aspects are ‘financial institutions development’(FID) and ‘financial markets development’(FMD). Within the scope of the study, which is designed as a time series study, unit root and stationarity process tests were performed. Finding the series stationary, vector autoregressive model (VAR) is proposed. After lag length selection with the stable model, impulse response(IR) analyses were performed. After the IR analyses variance decomposition was performed using the Cholesky method. Both the economic development and financial development are considered to be important for Turkey and they have a relationship. The variables used in the study were found to be representative but not enough to conduct political or financial decisions. With the digital transformation, new variables should also be searched to represent the financial development and economic growth.

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