The Relationship between Financialization and Economic Growth: Evidence from ARDL Model for the Turkish Economy

Abstract

While financialization has been widely discussed in the literature, Turkish economy-related literature is understudied. To our knowledge, there is no analysis of the link between financialization and economic growth in the Turkish economy. The present study is a very early attempt to measure financialization at the macroeconomic level for the Turkish economy using the ARDL model for 2002Q1-2016Q2. For the definition of financialization, the present paper uses the share of finance, insurance, and real estate sectors as of GDP at the macroeconomic level for the Turkish economy. The findings show a long-run relationship between financialization and economic growth; however, financialization negatively impacts the long-term growth of the Turkish economy.

JEL: E44, O11, O16