THE RELATIONSHIP BETWEEN FINANCIAL DEPTH AND CURRENT ACCOUNT DEFICIT IN TURKEY

Yıl 2017, Cilt: 13 Sayı: 3, 507 - 520, 01.08.2017

Şehnaz Bakır Yiğitbaş

https://doi.org/10.17130/ijmeb.2017331325

Cited By: 2

Öz

In this study, the relationship between financial depth and current account deficit in Turkey is investigated in the short-run and long-run by using Bounds Test approach developed by Pesaran & Shin 1999 and Pesaran 2001 for the period 1987:01-2014:04. According to the results, there is a long-term relationship between financial depth and the current account deficit, but there is no short-term relationship. In addition, there is a negative relationship between the current account deficit variables and financial depth indicating that the more financial depth increases; there is an improvement in the current account deficit

Anahtar Kelimeler

Financial Depth, Current Account Deficit, Turkish Economy

THE RELATIONSHIP BETWEEN FINANCIAL DEPTH AND CURRENT ACCOUNT DEFICIT IN TURKEY

Öz

In this study, the relationship between financial depth and current account deficit in Turkey is investigated in the short-run and long-run by using Bounds Test approach developed by Pesaran & Shin 1999 and Pesaran 2001 for the period 1987:01-2014:04. According to the results, there is a long-term relationship between financial depth and the current account deficit, but there is no short-term relationship. In addition, there is a negative relationship between the current account deficit variables and financial depth indicating that the more financial depth increases; there is an improvement in the current account deficit.

Anahtar Kelimeler

Finansal Derinlik, Cari Açık, Türkiye Ekonomisi

Kaynakça

• Blanchard, O., & Giavazzi, F. (2002). Current account deficits in the euro area: The end of the Feldstein-Horioka puzzle?. Brookings Papers on Economic Activity, 33(2), 147-210.
• Brissmis, S. N., Handroyiannis, G., Papazoğlu, C., Tsaveas, N. T., & Vasardani, M. (2010). Current account determinants and external sustainability in periods of structural change. European Central Bank, Working Paper Series, No. 1243.
• Calderon, C., Chong, A., & Loayza, N. (2000). Determinants of current account deficit in developing countries. The World Bank, Policy Research Working Paper Series, No: 2398.
• CBRT. (2010). Financial stability report. Issue: 11, December.
• Clarida, R. (2005). Japan, China, and the U. S. current account deficit. CATO Journal, 25(1), 111-114.
• Clark, L. (2012). The external current account in macroeconomic adjustment process in Turkey. Princeton University The Woodrow Wilson School’s Gradute Policy Workshop.
• Chinn, M. D., & Prasad, E. S. (2000). Medium-Term determinants of current accounts in industrial and developing countries: An empirical exploration. NBER Working Paper, No. 7581.
• Chinn, M. D. & Ito, H. (2005). Current account balances, financial development and institutions: assaying the world “saving glut”. NBER Working Paper, No: 11761.
• Chinn, M. D., Eichengreen B., & Ito, H. (2011). A forensic analysis of global imbalances. NBER Working Paper Series, No. 17513.
• Edward, S. (1995). Why are saving rates so different across countries?: An international comparative analysis. NBER Working Paper Series, No. 5097.
• Ekinci, M. F., Erdem, F. P., & Kılınç, Z. (2014). Credit growth, current account and financial depth. Central Bank of the Republic of Turkey, Working Paper No: 14/21.
• Feldstein, M., & Horioka, Charles. (1980). Domestic savings and international capital flows. The Economic Journal, 90(358), 314-329.
• Hermann, S. & Winkler, A. (2008). Real convergence, financial markets, and the current account emerging Europe versus emerging Asia. European Central Bank, Occasional Paper Series, No. 88/June.
• IMF. (2014a). Are global imbalances at a turning point. World Economic Outlook, October, 115-154.
• IMF. (2014b). Turkey-Country Report. No. 14/330.
• Kamas, L., & Joyce, J. (1993). Money, income and prices under exchange rates: Evidence from causality tests and VARs. Journal of Macroeconomics, 15(4), 747-768.
• King, R. G., & Levine, R. (1993). Finance and growth, Schumpeter might be right. Country Economics Department The World Bank, February 1993, WPS. 1083.
• Lynch, D. (1996). Measuring financial sector development: A study of selected Asia-Pasific countries. The Developing Economies, 34(1), 3-33.
• Martin, P., & Rey, H. (2004). Financial super-markets: Size matters for asset trade, forthcoming. Journal of International Economics, 64(2), 335-361.
• McKinnon, R. I. (1973). Money and capital in economic development. Washington, DC: Brookings Institution.
• Mendoza, E. G., Quadrini, V., & Rios-Rull, J. V. (2006, November). Financial integration, financial deepness and global imbalances. 7th. Jacques Polak Annual Research Conference, Hosted by IMF, Washington DC.
• Pesaran, M. H., & Shin Y. (1999). An autoregressive distributed lag modeling approach to cointegration analysis. In S. Strom (Eds.), Econometrics and economic theory in the 20th century: The Ragnar Frisch centennial symposium, Cambridge: Cambridge U. P.
• Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.
• Republic of Turkey Ministry of Development (2014). Domestic savings, tenth development plan 2014-2018 report of the specialization commission.
• Republic of Turkey Ministry of Development (2015). Economic and social indicators (1950- 2014).
• Rogg, C. S. (2000). The impact of access to credit on the saving behavior of micro entrepreneurs. Evidence from 3 Latin American Countries. Inter-American Development Bank, April.
• Rousseau, P. L., & Wachtel, P. (2001). Inflation, financial development and growth. In T, Negishi, R. Ramachandran, K. Mino (Eds.), Economic theory, dynamics and markets: Essays in honor of Ryuzo Sato (pp. 309–324). Boston: Kluwer Academic Publishers.
• Sahay, R. (2015). Rethinking financial deepening: Stability and growth in emerging markets, IMF Staff Discussion Note.
• Shaw, E. (1973). Financial deepening in economic development. New York: Oxford University Press.
• Şengönül, A. (2008). Different twin deficits in different time intervals: Evidence from Turkey. Asian-African Journal of Economics and Econometrics, 8(1), 29–42.
• Van Rijckeghem, C. (2010). Determinants of private saving in Turkey: An update, Working Papers 2010 / 04, Boğaziçi University Department of Economics.
• World Bank and Republic of Turkey Ministry of Development (2012). Sustaining high growth: The role of domestic savings. Synthesis Report No. 66301-TR.
• World Bank (2013). Turkey-Sustaining High Growth: The Role of Domestic Savings, Was- hington DC.