EFFECT OF FINANCIAL LIBERALIZATION ON ECONOMIC GROWTH: TURKEY CASE
FİNANSAL SERBESTLEŞMENİN EKONOMİK BÜYÜME ÜZERİNE ETKİSİ: TÜRKİYE ÖRNEĞİ

Author : Meryem SAMIRKAŞ KOMŞU -- Hülya BAKAN - Mustafa Can SAMIRKAŞ
Number of pages : 299-314

Abstract

With the phenomenon of globalization, the effects of financial liberalization have become an important issue for developing countries as well as developed countries. In particular, the impact of financial liberalization on economic growth has been a topic of interest to researchers in recent years. The Turkish economy has undergone significant changes since the 1980s when financial liberalization took place. In these changes, policies to liberalize the interest, exchange rate and capital movements put into practice in order to provide financial liberalization have been effective. As a result of the policies implemented during the liberalization period, the Turkish economy reached high growth rates in some periods, but it also faced financial crises in other periods due to the liberalization of capital movements. In order to test whether there is a meaningful relationship between financial liberalization and economic growth and to demonstrate the direction of this possible relationship, the relationship between financial liberalization and economic growth over the period 1998/Quarter 1 – 2017/Quarter 1 was initially tested with the VAR (Vector Autoregressive) model. Then, the usability of the effective variable as a policy tool was identified with impulse-response functions, and the impact level was determined by variance decompositions. Then, Granger Causality Test was applied in order to determine economic growth, financial liberalization and commercial openness in the short term. As a result of the analysis, it can be said that capital flows, which are indicators of financial liberalization, affect economic growth. It can be argued, however, that capital flows are one of the causes of foreign trade volume. In addition, it was determined in this study that GDP and M2Y are Granger causes of foreign trade volume.

Keywords

Financial Liberalization, Turkish Economy, Economic Growth, VAR Analysis, Granger Causality Test

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