The Asymmetric Relationship between Financial Development and Economic Growth in Turkish Economy

Year 2023, Volume: 8 Issue: 2, 543 - 558, 30.12.2023

Bekir Aşık

Abstract

With this study, symmetric and asymmetric relation between growth and financial system is investigated for Turkish economy over the period 2003.Q1-2021.Q4. Total credit private credit, total domestic credit and broad money are selected as a proxy for development of financial system and Autoregressive Distributed Lag (ARDL) method and Non-linear Autoregressive Distributed Lag (NARDL) method is employed to capture the existence of asymmetric relation between financial variables and growth. In addition to these methods, the causality between growth and financial system is investigated using Granger causality test. Results imply that there is a positive relation both in long time and in short time periods between development of financial system and growth. Furthermore, changes in total credit and broad money supply have asymmetric effect on growth. Granger causality test results indicate that ‘the supply-leading hypothesis’ is valid for Turkish economy in long time period.

Keywords

Financial Development, Economic Growth, ARDL, NARDL

Türkiye Ekonomisinde Finansal Gelişme ile Ekonomik Büyüme Arasındaki Asimetrik İlişki

Abstract

Bu çalışmanın amacı da finansal gelişme ve iktisadi büyüme arasındaki simetrik ve simetrik olmayan ilişkiyi 2003.Ç1-2023.Ç4 zaman aralığında Türkiye ekonomisi için test ederek, literatüre katkı sağlamaktır. Finansal gelişmeyi test edebilmek için özel sektöre verilen toplam kredi hacmi, özel sektöre verilen toplam kredi hacmi ve para arzı değişkenleri tercih edilmiş ve Simetrik Gecikmesi Dağıtılmış Otoregresif (ARDL) Modeli ve Simetrik Olmayan Gecikmesi Dağıtılmış Otoregresif (NARDL) Modeli tahmin edilerek, finansal gelişme ve iktisadi büyüme arasındaki ilişki incelenmiştir. Bu yöntemlere ek olarak, finansal gelişme ve büyüme arasındaki nedensellik ilişkisi Granger Nedensellik yöntemiyle araştırılmıştır. Elde edilen sonuçlara göre finansal gelişmeyle ekonomik büyüme arasında hem kısa dönemde hem de uzun dönemde pozitif bir ilişki tespit edilmiştir. Ayrıca finansal gelişme göstergesi olarak seçilen değişkenlerden toplam kredi ve para arzının, ekonomik büyüme arasında asimetrik ilişki bulunmaktadır. Bu sonuçlara ek olarak, Granger nedensellik testiyle Türkiye ekonomisinde, uzun dönemde, arz yanlı teoriyi destekleyen bir sonuç elde edilmiştir.

Keywords

Finansal Gelişme, İktisadi Büyüme, ARDL, NARDL

References

• Acaravcı, A., Ozturk, İ., & Acaravcı, S. K. (2007). Finance–Growth Nexus: Evidence from Turkey. International Research Journal of Finance and Economics, 11, 30-40.
• Adarov, A., & Tchaidze, R. (2011). Development of Financial Markets in Central Europe: the Case of the CE4 Countries. IMF Working Paper(WP/11/101), 1-34.
• Adu, G., Marbuah, G., & Mensah, J. T. (2013). Financial Development and Economic Growth in Ghana: Does the Measure of Financial Development Matter? Review of Development Finance, 3, 192-202. doi:10.1016/j.rdf.2013.11.001
• Adusei, M., & Nkrumah, K. (2013). Financial Development and Economic Growth: Evidence from Ghana. The International Journal of Business and Finance Research, 7(5), 61-76.
• Ahmed, A. D. (2013). Effects of Financial Liberalization on Financial Market Development and Economic Performance of the SSA Region: An Empirical Assessment. Economic Modelling, 30, 261-273. doi:10.1016/j.econmod.2012.09.019
• Ak, M. Z., Altıntaş, N., & Şimşek, A. S. (2016). Türkiye’de Finansal Gelişme ve Ekonomik Büyüme İlişkisinin Nedensellik Analizi. Doğuş Üniversitesi Dergisi, 17(2), 151-160.
• Akkay, C. (2010). Finansal Entegrasyon Sürecinde Finansal Gelişme Ekonomik Büyüme Arasındaki Nedenselliğin Türkiye Açısından Dönemsel Olarak Araştırılması. Sosyal Bilimler Dergisi, 2, 55-70.
• Aydın, M. K., Ak, M. Z., & Altıntaş, N. (2014). Finansal Gelişmenin ‘Büyüme’ye Etkisi: Türkiye Özelinde Nedensellik Analizi. Maliye Dergisi, 0(167), 149-162.
• Bakang, M. L. (2015). Effects of Financial Deepening on Economic Growth in Kenya. International Journal of Business and Commerce, 4(7), 1-50.
• Bayar, Y. (2014). Financial Development and Economic Growth in Emerging Asian Countries. Asian Social Science, 10(9), 8-17.
• Beck, T., Levine, R., & Loayaza, N. (2000). Finance and the Sources of Growth. Journal of Financial Economics, 58(1-2), 261-300. doi:10.1016/S0304-405X(00)00072-6
• Bencivenga, V. R., & Smith, B. D. (1991). Financial Intermediation and Endogenous Growth. Review of Economic Studies(58), 195-209.
• Bist, J. P. (2018). Financial Development and Economic Growth: Evidence from a Panel of 16 African and Non-African Low-Income Countries. Cogent Economics & Finance, 6, 1-17. doi:10.1080/23322039.2018.1449780
• Bittencourt, M. (2012). Financial Development and Economic Growth in Latin America: Is Schumpeter Right? Journal of Policy Modeling, 34, 341-355. doi:10.1016/j.jpolmod.2012.01.012
• Bojanic, A. N. (2012). The Impact of Financial Development and Trade on the Economic Growth of Bolivia. Journal of Applied Economics, 40(1), 51-70. doi:10.1016/S1514-0326(12)60003-8
• Bong, A., & Premaratne, G. (2019). The Impact of Financial Integration on Economic Growth in Southeast Asia. Journal of Asian Finance, Economics and Business, 6(1), 107-119. doi:10.13106/jafeb.2019.vol6.no1.107
• Camba, A. C., & Camba, A. L. (2020). The Dynamic Relationship of Domestic Credit and Stock Market Liquidity on the Economic Growth of the Philippines. Journal of Asian Finance, Economics and Business, 7(1), 37-46. doi:10.13106/jafeb.2020.vol7.no1.37
• Ceylan, S., & Durkaya, M. (2010). Türkiye’de Kredi Kullanimi-Ekonomik Büyüme İlişkisi. Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, 24(2), 21-35.
• Demirgüç-Kunt, A. (2006). Finance and Economic Development: Policy Choices for Developing Countries. World Bank Policy Research Working Paper(WPS3955), 1-55.
• Demirhan, E., Aydemir, O., & İnkaya, A. (2011). The Direction of Causality between Financial Development and Economic Growth: Evidence from Turkey. International Journal of Management, 28(1), 3-19.
• Eroğlu, İ., & Yeter, F. (2021). Finansal Gelişme ve Ekonomik Büyüme İlişkisi: Türkiye İçin Nedensellik Analizi. JOURNAL OF EMERGING ECONOMIES AND POLICY, 6(2), 269-283.
• Eyüboğlu, K., & Akan, K. (2020). Türkiye’de Finansal Gelişme ve Ekonomik Büyüme İlişkisi: RALS-EG Eşbütünleşme Testi. Afyon Kocatepe Üniversitesi Sosyal Bilimler Dergisi, 22(4), 974-988.
• Felek, Ş., Yayla, N., & Çağlar, A. (2018). Türkiye'de AB Doğrudan Yatırımları, Finansal Gelişme ve Ekonomik Büyüme İlişkisine ARDL Yaklaşımı. Uluslararası İktisadi ve İdari İncelemeler Dergisi(20), 63-82. doi:10.18092/ulikidince.330994
• Fendoğlu, E. (2021). Türkiye’de Finansal Gelişme ve Ekonomik Büyüme Arasındaki İlişki: Fourier Testlerden Kanıtlar. Uygulamalı Ekonomi ve Sosyal Bilimler Dergisi, 3(2), 19-34. doi:10.46959/jeess.993931
• Ferreira, C. (2021). Panel Granger Causality between Financial Development and Economic Growth. REM Working Paper Series(0179-2021), 1-32.
• Giri, A. K., & Sehrawat, M. (2015). Financial Development and Economic Growth: Empirical Evidence from India. Studies in Economics and Finance, 32(3), 340-356. doi:10.1108/SEF-10-2013-0152
• Goldsmith, R. W. (1969). Financial Structure and Development. New Haven: Yale University Press.
• Gurley, G., & Shaw, E. S. (1960). Money in a Theory of Finance. Washington, D.C.: Brookings Institution.
• Halıcıoğlu, F. (2007). The Financial Development and Economic Growth Nexus for Turkey. EERI Research Paper Series, 1-19. Retrieved from http://hdl.handle.net/10419/142511
• Hasan, I., Watchtel, P., & Zhou, M. (2009). Institutional Development, Financial Deepening and Economic Growth: Evidence from China. Journal of Banking and Finance, 33, 157-170.
• Hicks, J. (1969). A Theory of Economic History. Oxford: Clarendon Press.
• Hye, Q. M., Wizarat, S., & Lau, W.-Y. (2016). The Impact of Trade Openness on Economic Growth in China: An Empirical Analysis. Journal of Asian Finance, Economics and Business, 3(3), 27-37. doi:10.13106/jafeb.2016.vol3.no3.27
• Jalil, A., & Feridun , M. (2011). Impact of Financial Development on Economic Growth: Empirical Evidence from Pakistan. Journal of the Asia Pacific Economy, 16(1), 71-80. doi:doi.org/10.1080/13547860.2011.539403
• Jung, W. S. (1986). Financial Development and Economic Growth: International Evidence. Economic Development and Cultural Change, 34(2), 333-346.
• Kandır, S. Y., İskenderoğlu, Ö., & Önal, Y. B. (2007). Finansal Gelişme ve Ekonomik Büyüme Arasındaki İlişkinin Araştırılması. Ç.Ü. Sosyal Bilimler Enstitüsü Dergisi, 16(2), 311-326.
• Kar, M., Nazlıoğlu, Ş., & Ağır , H. (2014). Trade Openness, Financial Development and Economic Growth in Turkey: Linear and Nonlinear Causality Analysis. BDDK Bankacılık ve Finansal Piyasalar Dergisi, 8(1), 63-86. Retrieved from https://dergipark.org.tr/tr/pub/bddkdergisi/issue/57349/812613
• Karahan, Ö., & Yılgör, M. (2011). Financial Deepening and Economic Growth in Turkey. MIBES Transactions, 5(2), 19-29.
• Keskin, N., & Karşıyakalı, B. (2010). Finansal Gelişme ve Ekonomik Büyüme İlişkisi Türkiye Örneği. Finans Politik & Ekonomik Yorumlar, 47(548), 76-94.
• Khan, M. A. (2008). Financial Development and Economic Growth in Pakistan: Evidence Based on Autoregressive Distributed Lag (ARDL) Approach. South Asia Economic Journal, 9(2), 375-391. doi:10.1177/139156140800900206
• Kılıç, M., Gürbüz, A., & Ayrıçay, Y. (2019). Finansal Gelişmenin Ekonomik Büyümeye Etkisi: Türkiye Örneği. Kahramanmaraş Sütçü İmam Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 9(1), 53-68.
• King, R. G., & Levine, R. (1993). Finance and Growth: Schumpeter Might Be Right? The Quarterly Journal of Economics, 108(3), 717-737.
• King, R. G., & Levine, R. (1993). Finance, Entrepreneurship and Growth Theory and Evidence. Journal of Monetary Economics, 32(3), 513-542. doi:10.1016/0304-3932(93)90028-E
• Krishnankutty, R. (2011). Role of Banks Credit in Economic Growth: A Study with Special Reference to North East India. The Economic Research Guardian, 1(2), 60-71.
• Kumar, K., & Paramanık, R. N. (2020). Nexus between Indian Economic Growth and Financial Development: A Non-Linear ARDL Approach. Journal of Asian Finance, Economics and Business, 7(6), 109-116. doi:10.13106/jafeb.2020.vol7.no6.109
• Levine , R., & Zervos, S. (1998). Stock Markets, Banks, and Economic Growth. The American Economic Review, 88(3), 537-558.
• Levine, R. (1997). Financial Development and Economic Growth: Biews and Agenda. Journal of Economic Literature, 35(2), 688-726.
• Levine, R. (2004, September). Finance and Growth: Theory and Evidence. Cambridge: NBER Working Paper Serie, No: 10766.
• Lucas, R. E. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics, 22, 3-42.
• Lyoboyi, M. (2013). Bank and Non-Bank Financial Deepening and Economic Growth: The Nigerian Experience (1981–2010). Economic Notes by Banca Monte dei Paschi di Siena SpA, 42(3), 247-271. doi:10.1111/j.1468-0300.2013.12008.x
• Matei, I. (2020). Is Financial Development Good for Economic Growth? Empirical Insights from Emerging European Countries. Quantitative Finance and Economics, 4(4), 653-678. doi:10.3934/QFE.2020030
• McKinnon, R. I. (1973). Money and Capital in Economic Development. Washington: Brookings Institution.
• Mercan, M., & Peker, O. (2013). Finansal Gelişmenin Ekonomik Büyümeye Etkisi: Ekonometrik bir Analiz. Eskişehir Osmangazi Üniversitesi İktisadi ve İdari Bilimler Dergisi, 8(1), 93-120.
• Miller, M. H. (1998). Financial Markets and Economic Growth. Journal of Applied Corporate Finance, 11(3), 8-15.
• Naik, P. K., & Padhi, P. (2015). On the Linkage Between Stock Market Development and Economic Growth in Emerging Economies. Review of Accounting and Finance, 14(4), 363-381. doi:10.1108/RAF-09-2014-0105
• Narayan, P. K., & Narayan, S. (2013). The Short-Run Relationship between the Financial System and Economic Growth: New Evidence from Regional Panels. International Review of Financial Analysis, 29, 70-78. doi:10.1016/j.irfa.2013.03.012
• Ngoc, B. H. (2020). The Asymmetric Effect of Inflation on Economic Growth in Vietnam: Evidence by Nonlinear ARDL Approach. Journal of Asian Finance, Economics and Business, 7(2), 143-149. doi:10.13106/jafeb.2020.vol7.no2.143
• Odugbesan, J. A., Sunday, T. A., & Olowu, G. (2021). Asymmetric Effect of Financial Development and Remittance on Economic Growth in MINT Economies: An Application of Panel NARDL. Future Business Journal, 7(1), 1-9. doi:10.1186/s43093-021-00085-6
• Oktayer, A. (2008). Finansal derinleşme ve iktisadi büyüme ilişkisi: Türkiye Örneği. İstanbul Üniversitesi İktisat Fakültesi Mecmuası, 58(2), 45-74.
• Opoku, E. E., Ibrahim, M., & Sare, Y. A. (2019). The Casual Relationship between Financial Development and Economic Growth in Africa. International Review of Applied Economics, 1-25. doi:10.1080/02692171.2019.1607264
• Ozturk, İ. (2008). Financial Development And Economic Growth: Evidence From Turkey. Applied Econometrics and International Development, 8(1), 85-98.
• Pata, U. K., & Ağca, A. (2018). Finansal Gelişme ve Ekonomik Büyüme Arasındaki Eşbütünleşme ve Nedensellik İlişkisi: Türkiye Örneği. Osmaniye Korkut Ata Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 2(2), 115-128.
• Patrick, H. T. (1966). Financial Development and Economic Growth in Underdeveloped Countries. Economic Development and Cultural Change, 14(174-189).
• Peseran, H. M., Shin, Y., & Smith, R. J. (2001). Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 16(3), 289-326. doi:10.1002/jae.616
• Pradhan, R. P., Hishigaki, Y., & Hall, J. H. (2017). The Multivariate Dynamic Causal Relations between Financial Depth, Inflation, and Economic Growth. The Philippine Review of Economics, 54(1), 63-93.
• Qamruzzaman, M., & Jianguo, W. (2018). Investigation of the Asymmetric Relationship between Financial Innovation, Banking Sector Development, and Economic Growth. Quantitative Finance and Economics, 2(4), 952-980.
• Rana, R. H., & Barua, S. (2015). Financial Development and Economic Growth: Evidence from A Panel Study on South Asian Countries. Asian Economic and Financial Review, 5(10), 1159-1173. doi:10.18488/journal.aefr/2015.5.10/102.10.1159.1173
• Robinson, J. (1952). The Generalization of the General Theory. In J. Robinson, The Generalisation of the General Theory and other Essays (pp. 1-76). London: McMillan.
• Schumpeter, J. A. (1934). The Theory of Economic Development. Cambridge: Harvard University Press.
• Shaw, E. S. (1973). Financial Deepening in Economic Development. New York: Oxford University Press.
• Shin, Y., Yu, B., & Greenwood-Nimmo , M. (2014). Modelling Asymmetric Cointegration and Dynamic Multipliers in a Nonlinear ARDL Framework. In R. C. Sickles, & W. C. Horrace, Festschrift in Honor of Peter Schimdt Econometric Methods and Applications (pp. 281-314). New York: Springer. doi:10.1007/978-1-4899-8008-3_9
• Sönmez, F. E., & Sağlam, Y. (2017). Financial Development and Economic Growth: A Comparative Analysis Between Euro Area and emerging Developing Countries. Balıkesir University The Journal of Social Sciences Institute, 20(38), 179-201.
• Stern, N. (1989). The Economics of Development: a Survey. The Economic Journal, 99(397), 597-685.
• Stojkoski, V., Popova, K., & Tevdovski, D. (2017). Financial Development and Growth: Panel Cointegration Evidence from South-Eastern and Central Europe. Munich Personal RePEc Archive Paper(80802), 1-21. Retrieved from https://mpra.ub.uni-muenchen.de/80802/
• Sudip, P., & Dastidar, S. G. (2018). Finance and Growth: Evidence from South Asia. Jindal Journal of Business Research, 7(1), 1-24. Retrieved from http://journals.sagepub.com/home/brj
• Taşseven, Ö., & Yılmaz, N. (2022). Finansal Gelişme Göstergeleri ile Ekonomik Büyüme İlişkisi: Türkiye Örneği. Doğuş Üniversitesi Dergisi, 23(1), 105-125.
• Türedi, S., & Berber , M. (2010). Finansal Kalkınma, Ticari Açıklık ve Ekonomik Büyüme Arasındaki İlişki: Türkiye Üzerine Bir Analiz. Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 0(35), 301-316. Retrieved from https://dergipark.org.tr/tr/pub/erciyesiibd/issue/5892/77938
• Valickova, P., Havranek, T., & Horvath, R. (2014). Financial Development and Economic Growth: A Meta-Analysis. Journal of Economic Surveys, 29(3), 506-526. doi:10.1111/joes.12068
• Wang, A. (2019). An Empirical Study on the Relationship between China’s Financial Development and Economic Growth Based on Sensor Technology. EURASIP Journal on Wireless Communications and Networking, 42, 1-7. doi:10.1186/s13638-018-1322-z
• Yang, F. (2019). The Impact of Financial Development on Economic Growth in Middle Income Countries. Journal of International Financial Markets, Institutions and Money, 59, 74-89. doi:10.1016/j.intfin.2018.11.008
• Yıldırım, S., Özdemir, B. K., & Doğan , B. (2013). Financial Development and Economic Growth Nexus in Emerging European Economies: New Evidence from Asymmetric Causality. International Journal of Economics and Financial Issues, 3(3), 710-722.
• Yılmaz, Ö., & Kaya, V. (2006). Finansal Kalkınma ve İktisadi Büyüme Arasındaki Nedensellik. İktisat, İşletme ve Finans Dergisi, 21(244), 120-131. doi:10.3848/iif.2006.244.3148
• Yüksel , S., & Adalı, Z. (2017). Farklı Kredi Türlerinin Ekonomik Büyümeye Olan Etkisinin Belirlenmesi: Toda Yamamoto Analizi ile Türkiye Üzerine Bir Uygulama. Politik Ekonomik Kuram, 1(1), 1-21.
• Zang, H., & Kim, Y. C. (2007). Does Financial Development Precede Growth? Robinson and Lucas Might be Right? Applied Economics Letters, 14(1), 15-19. doi:10.1080/13504850500425469
• Zhang, J., Wang, L., & Wang, S. (2012). Financial Development and Economic Growth: Recent Evidence from China. Journal of Comparative Economics, 40, 393-412. doi:10.1016/j.jce.2012.01.001