Abstract:

Financial system constitutes an important infrastructure of a country's economy The financial system consists of financial institutions, financial instruments, institutions and legal regulations that bring together those who request funds and those who supply funds as an important part of the functioning of the economic system. The development of the financial system is related to the increase in the quality and quantity of financial institutions and financial instruments, and the institutional and legal regulations that increase financial efficiency and stability. The developmental level of the financial structure within the financial system is thought to be an important factor in achieving the economic goals of the countries. There are many studies indicating that financial development is an important determinant of economic growth. This study aims to test the existence of such a relationship in Turkey.In this research conducted for the Turkish economy, the relationship between financial development and economic growth between 1991 and 2019 was estimated using the Toda Yamamato (1995) causality test. As a result of the empirical study, it shows that there is a one-way causality relationship of financial development to economic growth of the Turkish economy in the relevant period. Such a relationship indicates to policy makers that it is necessary to include policy practices and legal regulations that support financial development.

Keywords: