Abstract:

The aim of this study is to investigate the relationship between financial development and economic growth for the period from 1988 to 2004 in Turkey In the analyses quarterly values of real per capita national income are used as a proxy for economic growth On the other hand four variables are used as proxies for financial development These variables are the ratio of ISE trading volume to national income the ratio of ISE capitalisation value to national income ISE turnover ratio and the ratio of private sector bank credits to national income Johansen Cointegration error correction and casuality methods are employed Findings reveal that there is a demand following relationship between financial development and economic growth Furthermore financial market does not appear to support economic growth in Turkey Nevertheless economic growth seems to impact financial growth Key Words: Financial Development Economic Growth National Income Stock Market Bank Credits

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