THE ROLE OF BANKING SYSTEM IN PROVINCIAL ECONOMIC DEVELOPMENT: A STUDY OF TURKIYE, FROM THE 70S TO THE 2000S

Yıl 2024, Cilt: 46 Sayı: 1, 233 - 247, 27.06.2024

Şefika Betül Esen

https://doi.org/10.14780/muiibd.1427473

Öz

This research examines the relationship between banking activities and provincial economic development. In particular, the study offers insight on the nature of the regional economic development discrepancies in Turkiye. The study finds that, despite the trend towards decentralisation that takes place in regional economic policies, the banking system adopts centralisation policies. Using dynamic generalised method of moment (GMM) estimates, we evaluated a unique data set including 39 years of provincial demographic, socioeconomic, and financial factors in Turkey. The study demonstrates that the banking intermediation is detrimental to provincial development. The Turkish banking system’s hierarchical structure prevents financial intermediaries from fulfilling their role in fostering development. Consolidation and concentration strategies must be reassessed, since they tend to favour centralisation, which has been shown to be inefficient for regional convergence. The results also suggest that branch managers should be granted greater decision-making authority to make better use of locally produced information when approving or rejecting projects, which would eventually lead to a reduction in provincial disparities.

Anahtar Kelimeler

soft & hard information, Financial intermediation, branch banking, provincial economic growth, dynamic GMM

Bankacılık Sisteminin İl Bazında İktisadi Kalkınmadaki Rolü: 70'lerden 2000'lere Türkiye örneği.

Öz

Bu araştırma, bankacılık faaliyetleri ile illerin ekonomik kalkınması arasındaki ilişkiyi incelemektedir. Çalışma özellikle Türkiye'deki bölgesel ekonomik kalkınma farklılıklarının doğasına ışık tutmaktadır. Araştırma, bölgesel ekonomi politikalarında gerçekleşen adem-i merkeziyetçi eğilime rağmen, bankacılık sisteminin merkezileşme politikalarını benimsediğini belirlemiştir. Çalışmada "Dynamic Generalised Method of Moments (DGMM)" tahminleri kullanarak Türkiye'deki 39 yıllık demografik, sosyoekonomik ve finansal faktörleri içeren benzersiz bir veri setini değerlendirilmiştir. Çalışma, bankacılık aracılığının il kalkınması için negatif etkisi olduğunu göstermektedir. Türk bankacılık sisteminin hiyerarşik yapısı, finansal aracıların gelişmeyi teşvik etme rolünü yerine getirmesini engellediği ortaya konmuştur. Bankaların birleşme ve konsantrasyon stratejileri tekrar değerlendirilmelidir, çünkü bunların genellikle bölgesel yakınsama için etkisiz olduğu gösterilmiştir. Sonuçlar ayrıca şube müdürlerine, projeleri onaylama veya reddetme konusunda daha fazla karar alma yetkisi verilmesi gerektiğini, bunun da nihayetinde iller arasındaki farklılıklarının azaltılmasına yol açacağı ön görülmüştür.

Anahtar Kelimeler

Finansal aracılık, Şube bankacılığı, kentsel ekonomik kalkınma, Dinamik GMM

Teşekkür

Special thanks to Professor Yener Altunbas (Bangor University) and Professor John Thornton (University of East Anglia) for their invaluable contributions during the writing of this paper.

Kaynakça

• Alessandrini, P., & Zazzaro, A. (1999). A ‘possibility’ approach to local financial systems and regional development: The Italian experience. In R. L. Martin (Ed.), *Money and the space economy* (pp. 95– 114). John Wiley.
• Anderson, T. W., & Hsiao, C. (1982). Formulation and estimation of dynamic models using panel data. *Journal of Econometrics, 18*(1), 47-82.
• Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. *Review of Economic Studies, 58*(2), 277-297.
• Beck, T., Levine, R., & Loyaza, N. (2000). Finance and the sources of growth. *Journal of Financial Economics, 58*(1), 261-300.
• Belke, A., Haskamp, U., & Setzer, R. (2016). Bank efficiency and regional growth in Europe: New evidence from micro-data. *ECB Working Paper* No. 1983.
• Berger, A. N., & Deyoung, R. (2001). The effects of geographic expansion on bank efficiency. *Journal of Financial Services Research, 19*(2), 163–184.
• Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. *Journal of Econometrics, 87*(1), 115–143.
• Borio, C., Furfine, C., & Lowe, P. (2002). Procyclicality of the financial system and financial stability: Issue and policy options. *BIS Working Papers* No. 1.
• Carbo-Valverde, S., del Paso, R. L., & Fernandez, F. R. (2007). Financial innovations in banking: Impact on regional growth. *Regional Studies, 4*(3), 311-326.
• Casselli, F., Esquivel, G., & Lefort, F. (1996). Reopening the convergence debate: A new look at cross-country growth empirics. *Journal of Economic Growth, 1*(3), 363-389.
• Degryse, H., Matthews, K., & Zhao, T. (2015). SMEs and access to bank credit: Evidence on the regional propagation of the financial crisis in the UK. *CESifo Working Paper* No. 5424.
• Demetriades, P. O., & Luintel, K. B. (1996). Financial development, economic growth and banking sector controls: Evidence from India. *Economic Journal, 106*(1), 359-374.
• Demirgüç-Kunt, A., & Maksimovic, V. (1998). Law, finance, and firm growth. *The Journal of Finance, 53*(6), 2107-2137.
• Dinc, I. S. (2005). Politicians and banks: Political influences on public banks in emerging countries. *Journal of Financial Economics, 77*(2), 453–479.
• Greenwald, B. C., Levinson, A., & Stiglitz, J. E. (1993). Capital market imperfections and regional economic development. In *Finance and development: Issues and experience* (pp. 65-98).
• Guiso, L., Sapienza, P., & Zingales, L. (2002). Does local financial development matter? *CEPR Discussion Paper* No. 3307.
• Guiso, L., Sapienza, P., & Zingales, L. (2004). The role of social capital in financial development. *The American Economic Review, 94*(3), 526-556.
• Hakenes, H., Hasan, I., Molyneux, P., & Xie, R. (2015). Small banks and local economic development. *Review of Finance, 19*(2), 653–683.
• Hao, C. (2006). Development of financial intermediation and economic growth: The Chinese experience. *China Economic Review, 17*(4), 347-362.
• Hasan, I., Koetter, M., & Wedow, M. (2009). Regional growth and finance in Europe: Is there a quality effect of bank efficiency? *Journal of Banking & Finance, 33*(8), 1446-1453.
• King, R. G., & Levine, R. (1993). Financial intermediation and economic development. In C. Mayer & X. Vives (Eds.), *Capital market and financial intermediation* (pp. 156-196). Cambridge University Press.
• Klagge, B., & Martin, R. (2005). Decentralized versus centralized financial systems: Is there a case for local capital markets? *Journal of Economic Geography, 5*(4), 387–421.
• Levine, R. (2005). Finance and growth: Theory and evidence. In P. Aghion & S. Durlauf (Eds.), *Handbook of economic growth* (pp. 865-934). Elsevier Science.
• Levine, R., Loayza, N., & Beck, T. (2000). Financial intermediation and growth: Causality and causes. *Journal of Monetary Economics, 46*(1), 31-77.
• Lucchetti, R., Papi, L., & Zazzaro, A. (2001). Banks’ inefficiency and economic growth: A micro‐macro approach. *Scottish Journal of Political Economy, 48*(4), 400-424.
• Martynova, N. (2015). Effect of bank capital requirements on economic growth: A survey. *DNB Working Paper* No. 467.
• Mear, F., & Werner, R. A. (2021). Subsidiarity as secret of success: “Hidden Champion” SMEs and subsidiarity as winning HRM configuration in interdisciplinary case studies. *Employee Relations: The International Journal, 43*(2), 524-554.
• Micco, A., Panizza, U., & Yanez, M. (2007). Bank ownership and performance: Does politics matter? *Journal of Banking and Finance, 31*(1), 219–241.
• Özötün, E. (1988). Türkiye Gayri Safi Yurtiçi Hasılasının İller İtibariyle Dağılımı: 1979-1986. İstanbul Sanayi Odası.
• Özötün, E. (1980). Türkiye Gayri Safi Yurtiçi Hasılası (İller İtibariyle): Kaynak ve Yöntemler (1975-1978). Başbakanlık Devlet İstatistik Enstitüsü.
• Önder, Z., & Özyıldırım, S. (2010). Banks, regional development disparity and growth: Evidence from Turkey. *Cambridge Journal of Economics, 34*(5), 975-1000.
• Önder, Z., & Özyıldırım, S. (2013). Role of bank credit on local growth: Do politics and crisis matter? *Journal of Financial Stability, 9*(1), 13-25.
• Samolyk, K. A. (1994). Banking conditions and regional economic performance: Evidence of a regional credit channel. *Journal of Monetary Economics, 34*(2), 259-278.