Abstract:

In literature, there is quite a lot of studies on the relations between economic growth and financial development, which only represents the economic dimension of human development. However, it appears that the relations between the countries’ level of financial development and the level of human development are not much included. This study focuses on the relationship of financial development with the United Nations Human Development Index, which includes countries’ income, education and health indicators and is a common index in this context. The study aims to provide empirical evidence in particular in Turkey. For this purpose, the financial development indicator used four different financial development indicators as the measure of the financial development and the relationship of this indicator to the United Nations Human Development Index was studied. The data cover the period 1990-2015. The study used basic components analysis as analytical methods, the ARDL limit test integration analysis and the Toda-Yamamoto approach Granger causal analysis. The result of the ARDL analysis is impossible to identify short and long-term relationships, while the result of the Toda-Yamamoto analysis has identified a causal relationship from financial development to human development in accordance with the findings of the studies in literature.

Abstract:

The studies about the relationship between financial development and economic growth that express the economic dimension of human development are frequently encountered in literature. This study aims to provide empirical evidence that the relation between financial development and Human Development Index which a unified index for income, education and health. In this study, also the gap about this subject in the literature was tried to be filled. For this, financial development index, which is formed by four different financial development indicators, is used as a measure of financial development and the relation of this index with United Nations Human Development Index is examined. The data cover the period of 1990-2015. In the study, principal component analysis, ARDL bounds test approach and Toda-Yamamoto Granger Causality Analysis were used. As a result of ARDL analysis, while cointegration, short and long term relationships were not detected, Toda-Yamamoto analysis revealed a causality relationship from financial development to human development in accordance with the findings of the studies in the literature.

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