Abstract:

In this study, the causal relationships of financial development indicators and trade openness with total economic growth, economic growth of manufacturing industry and construction sectors, are investigated in the 2003Q1 - 2018Q3 period. As a result of Johansen cointegration analysis with three seperate models, it is determined that there is a long-term relationship between the variables, valid for all models. According to the results of the Granger causality test, the direction of the relationship between financial development and economic growth changes according to the financial development indicator. Accordingly, a mutual causal relationship of the total economic growth and the manufacturing industry economic growth with the private sector loans, which is indicator of quantitative financial development, is identified. As the economic growth in the construction sector leads to financial development, it is determined that the demand-following view is dominant.

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