Financial Inclusion and Economic Growth in Turkey: A Causality Analysis

Authors

DOI:

https://doi.org/10.68099/ijabms.2022.216

Keywords:

financial institutions access, financial market access, economic growth, causality analysis

Abstract

The access to financial products and services by firms and individuals, in other words financial inclusions, is a significant determinant of economic growth. This study investigates the causality between financial inclusion indicators and economic growth in Turkey for the period of 1980-2019 through causality analysis. The causality analysis results reveal a insignificant interaction among financial institutions access, financial markets access, and economic growth.

References

Babajide, A.A., Adegboye, F.B., Omankhanlen, A.E. (2015). Financial inclusion and economic growth in Nigeria. International Journal of Economics and Financial Issues, 5(3), 629-637.

Bagehot, W. (1873). Lombart street: A Description of the money market. New York, Wiley & Sons.

Dahiya, S., Kumar, M. (2020). Linkage between financial inclusion and economic growth: An empirical study of the emerging Indian economy. Vision: The Journal of Business Perspective, 24(2), 184–193. https://doi.org/10.1177/0972262920923891 DOI: https://doi.org/10.1177/0972262920923891

Demirguc-Kunt, A., & Klapper, L. (2012). Measuring financial inclusion: The Global Findex database (No. 6025). The World Bank, https://www.bbvaresearch.com/wpcontent/uploads/2014/09/WP14-26_FinancialInclusion.pdf DOI: https://doi.org/10.1596/1813-9450-6025

Dickey, D., Fuller, W. A. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica, 49(4), 1057-1072 DOI: https://doi.org/10.2307/1912517

Ghosh, S. (2011). Does financial outreach engender economic growth? Evidence from Indian states. Journal of Indian Business Research, 3(2), 74-99. https://doi.org/10.1108/17554191111132206 DOI: https://doi.org/10.1108/17554191111132206

Gourene, G.A.Z., Mendy, P. (2017). Financial inclusion and economic growth in WAEMU: A multiscale heterogeneity panel causality approach, https://mpra.ub.uni-muenchen.de/82251/1/MPRA_paper_82251.pdf (15.10.2021)

Granger, C.W.J. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 37(3), 424-438. DOI: https://doi.org/10.2307/1912791

Guru, B.K.; Yadav, I.S. (2019). Financial development and economic growth: panel evidence from BRICS. Journal of Economics, Finance and Administrative Science, 24, 113-126. https://doi.org/10.1108/JEFAS-12-2017-0125 DOI: https://doi.org/10.1108/JEFAS-12-2017-0125

Huang, R., Kale, S., Paramati, S. R., & Taghizadeh-Hesary, F. (2021). The impact of financial inclusion and trade openness on economic development in the European Union. In S. C. Park, C.-J. Kim, F. Taghizadeh-Hesary, & P. Sirivunnabood (Eds.), Economic Integration in Asia and Europe: Lessons and Policies (pp. 641–664). Asian Development Bank Institute.

Ifediora, C., Offor, K.O, Eze, E.F., Takon,S.M., Ageme, A.E., Ibe, G.I., Onwumere, J.U.J. (2022) Financial inclusion and its impact on economic growth: Empirical evidence from sub-Saharan Africa, Cogent Economics & Finance, 10:1, 2060551, DOI: 10.1080/23322039.2022.2060551 DOI: https://doi.org/10.1080/23322039.2022.2060551

IMF (2021). Financial development index database, https://data.imf.org/?sk=f8032e80-b36c-43b1-ac26-493c5b1cd33b (accessed on 08 October 2021)

Inoue, T., & Hamori, S. (2016). Financial access and economic growth: Evidence from Sub-Saharan Africa. Emerging Markets Finance and Trade, 52(3), 743–753. https://doi.org/10.1080/1540496X.2016.1116282 DOI: https://doi.org/10.1080/1540496X.2016.1116282

Inoue, T., & Hamori, S. (2019). Financial inclusion and economic growth: Is banking breadth important for economic growth? In Financial inclusion, remittance inflows, and poverty reduction in developing countries: Evidence from empirical analyses (pp. 1–16). World Scientific Publishing. https://doi.org/10.1142/11231 DOI: https://doi.org/10.1142/9789813279094_0001

Kendall, J., Mylenko, N., & Ponce, A. (2010). Measuring financial access around the world. World Bank Policy Research Working Paper Series No. 5253. Washington, DC: World Bank. https://doi.org/10.1596/1813-9450-5253 DOI: https://doi.org/10.1596/1813-9450-5253

Kim, D.W., Yu, J.S., Hassan, M.K. (2018). Financial inclusion and economic growth in OIC countries. Research in International Business and Finance, 43, 1–14. DOI: https://doi.org/10.1016/j.ribaf.2017.07.178

King, R. G., Levine, R. (1993). Finance and growth: Schumpeter might be right. Quarterly Journal of Economics, 108(3), 717-737. DOI: https://doi.org/10.2307/2118406

Lenka, S.K., Sharma, R. (2017). Does financial inclusion spur economic growth in India? Journal of Developing Areas, 51(3), 215-228. https://doi.org/10.1353/jda.2017.0069 DOI: https://doi.org/10.1353/jda.2017.0069

Levine, R. (1997). Financial development and economic growth: Views and agenda. Journal of Economic Literature, 35(2), 688-726.

Mwaitete, C.P., George, L.A. (2018). Financial inclusion and economic growth: A regression analysis. Imperial Journal of Interdisciplinary Research, 4(1), 265-288.

Nguyen, H.M., Le, Q.T.T., Ho, C.M., Nguyen, T.C., Vo,D.H. (2021). Does financial development matter for economic growth in the emerging markets? Borsa Istanbul Review, https://doi.org/10.1016/j.bir.2021.10.004. DOI: https://doi.org/10.1016/j.bir.2021.10.004

Onaolapo, A.R. (2015). Effects of financial inclusion on the economic growth of Nigeria (1982-2012). International Journal of Business and Management Review, 3(8), 11-28.

Ozhan, A.C., Ozparlak, G. (2021). The impact of financial inclusion on economic growth and income inequality. İnsan ve Toplum Bilimleri Araştırmaları Dergisi, 10(2), 1971-1999. DOI: https://doi.org/10.15869/itobiad.865733

Ratnawati, K. (2020). The impact of financial inclusion on economic growth, poverty, income inequality, and financial stability in Asia. The Journal of Asian Finance, Economics and Business, 7(10), 73-85. https://doi.org/10.13106/jafeb.2020 DOI: https://doi.org/10.13106/jafeb.2020.vol7.no10.073

Raza, M. S., Tang, J., Rubab, S., Wen, X. (2019). Determining the nexus between financial inclusion and economic development in Pakistan. Journal of Money Laundering Control, 22(2), 195-209. https://doi.org/10.1108/JMLC-12-2017-0068 DOI: https://doi.org/10.1108/JMLC-12-2017-0068

Saab, G. (2017). Financial inclusion and growth. Business and Management Review, 8(4), 434-441.

Sahay, R., Čihák, M., N’Diaye, P., Barajas, A., Mitra, S., Kyobe, A., . . . Yousefi, S. R. (2015). Financial inclusion: Can it meet multiple goals? International Monetary Fund. IMF Staff Discussion Note 15/17 https://www.imf.org DOI: https://doi.org/10.5089/9781513585154.006

Sethi, D., Acharya, D. (2018). Financial inclusion and economic growth linkage: Some cross country evidence. Journal of Financial Economic Policy, 10(3), 369-385. https://doi.org/10.1108/JFEP-11-2016-0073 DOI: https://doi.org/10.1108/JFEP-11-2016-0073

Sharma, D. (2016). Nexus between financial inclusion and economic growth: Evidence from the emerging Indian economy. Journal of Financial Economic Policy, 8(1), 13-36. https://doi.org/10.1108/JFEP-01-2015-0004 DOI: https://doi.org/10.1108/JFEP-01-2015-0004

Shen, L., He, G. (2022). Threshold effect of financial system on high-quality economic development. Journal of Mathematics, vol. 2022, Article ID 9108130. https://doi.org/10.1155/2022/9108130 DOI: https://doi.org/10.1155/2022/9108130

Siddik, M. N. A., Ahsan, T., & Kabirag, S. (2019). Does financial permeation promote economic growth? Some econometric evidence from Asian countries. Sage Open, 9(3), 1–13. https://doi.org/101177/2158244019865811 DOI: https://doi.org/10.1177/2158244019865811

Svirydzenka, K. (2016). Introducing a New Broad-based Index of Financial Development. IMF Working Paper, WP/16/5, https://www.imf.org/external/pubs/ft/wp/2016/wp1605.pdf (accessed on 08 October 2021) DOI: https://doi.org/10.5089/9781513583709.001

Thomas, A. E., Bhasi, M., & Chandramouli, R. (2017). Financial accessibility and economic growth- evidence from SAARC countries. Contemplations on New Paradigms in Finance, 32–52.

Toda, H.Y., Yamamoto, T. (1995). Statistical inference in vector auto regressions with possibly integrated processes. Journal of Econometrics, 66(1-2), 225-250. https://doi.org/10.1016/0304-4076(94)01616-8 DOI: https://doi.org/10.1016/0304-4076(94)01616-8

Williams, H.T., Adegoke, A.J., Dare, A. (2017). Role of financial inclusion in economic growth and poverty reduction in a developing economy. Internal Journal of Research in Economics and Social Sciences, 7(5), 265~271.

World Bank (2021a). Financial inclusion, https://www.worldbank.org/en/topic/financialinclusion/overview (accessed on 08 October 2021)

World Bank (2021b). The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19, https://www.worldbank.org/en/publication/globalfindex (accessed on 08 October 2021)

World Bank (2021c). GDP per capita growth (annual %), https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG (accessed on 08 October 2021)

Downloads

Published

2022-04-20

Issue

Section

Research Articles

How to Cite

Financial Inclusion and Economic Growth in Turkey: A Causality Analysis. (2022). International Journal of Applied Business and Management Studies, 7(1), 146-153. https://doi.org/10.68099/ijabms.2022.216