<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>This study aims to investigate the relationship between financial development and economic growth in different time horizons for Turkey. In this study an ensemble of wavelet analysis and Granger causality test were used. PSC was used to represent financial development and GDP was used to represent growth. The annual data used are for the period 1961–2018. The result obtained for a one year period shows that the demand-following hypothesis is valid for Turkey. Financial development is the Granger cause of growth and positively affects growth. The financial sector should be supported for growth in the short term. While there is no causal relationship for the 2–4 year period, bidirectional causality relationships were determined for the periods of 4–8 years, 8–16 years and 16–32 years. Because variables are a Granger cause of each other and affect each other in a positive direction supporting the financial sector is a preferable policy when the purpose is to achieve growth in the long run.</p>
</abstract>

This study aims to investigate the relationship between financial development and economic growth in different time horizons for Turkey. In this study an ensemble of wavelet analysis and Granger causality test were used. PSC was used to represent financial development and GDP was used to represent growth. The annual data used are for the period 1961–2018. The result obtained for a one year period shows that the demand-following hypothesis is valid for Turkey. Financial development is the Granger cause of growth and positively affects growth. The financial sector should be supported for growth in the short term. While there is no causal relationship for the 2–4 year period, bidirectional causality relationships were determined for the periods of 4–8 years, 8–16 years and 16–32 years. Because variables are a Granger cause of each other and affect each other in a positive direction supporting the financial sector is a preferable policy when the purpose is to achieve growth in the long run.

An analysis of causal relationship between economic growth and financial development for Turkey: A MODWT—Granger causality test

Department of Economics, Faculty of Business and Economics

Economics and Business Review

This work is licensed under the Creative Commons Attribution 4.0 International License.

This study aims to investigate the relationship between financial development and economic growth in different time horizons for Turkey. In this study an...

An analysis of causal relationship between economic growth and financial development for Turkey: A MODWT—Granger causality test

Published Online: Oct 29, 2022

Page range: 59 - 81

Received: Nov 09, 2021

Accepted: Sep 09, 2022

DOI: https://doi.org/10.18559/ebr.2022.3.4

Keywords
financial development, economic growth, Granger causality, wavelet transform

© 2022 Hayri Abar, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

An analysis of causal relationship between economic growth and financial development for Turkey: A MODWT—Granger causality test

Published Online: Oct 29, 2022

Page range: 59 - 81

Received: Nov 09, 2021

Accepted: Sep 09, 2022

DOI: https://doi.org/10.18559/ebr.2022.3.4

Keywordsfinancial development, economic growth, Granger causality, wavelet transform

© 2022 Hayri Abar, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
financial development, economic growth, Granger causality, wavelet transform