Fınancıal Development And Economıc Growth: Coıntegratıon And Causalıty Analysıs For The Case Of Turkey
Abstract
The aim of this study is to examine the relationship between financial development leads to economic growth in Turkey. To accomplish this purpose, we apply the bounds testing approach to cointegration and Granger causality analysis to quarterly data covering the time period from 1987:1 to 2007:1. Cointegration analysis shows that the variables are cointegrated in the log-run. Parameter estimates show that both the short and long-run economic growth in Turkey is essentially insensitive to financial development. Causality analysis suggests that there is no Granger causality from financial development to economic growth. On the other hand, we find a strong unidirectional Granger causality from economic growth to financial development.