Economic growth and financial development in Turkey: new evidence

SOYTAŞ U., Kucukkaya E.

APPLIED ECONOMICS LETTERS, vol.18, no.6, pp.595-600, 2011 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 18 Issue: 6
  • Publication Date: 2011
  • Doi Number: 10.1080/13504851003761764
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.595-600
  • Middle East Technical University Affiliated: Yes


We examine the link between financial development and economic growth in Turkey for the period 1991 to 2005 using quarterly data. We use relatively new time series techniques that are less prone to bias to examine this relationship. We also construct a comprehensive financial development index using principal component analysis. When we control for the possible effects of inflation and monetary and fiscal policies on monetary aggregates and the economic growth rate, we fail to find any long-run causality in either direction. The result is also confirmed by generalized impulse response analysis.