Abstract:

Manufacturing industry sector, the largest subsector of industry sector, contributes to economic growth as an important source of export, employment and innovations especially in developing countries including Turkey. In our country where equity financing by issuing shares as external source possibilities are insufficent, manufacturing industry businesses use bank credits intensely for financing fixed assets and working capital. In this article relations between monthly manufacturing industry production index and monthly volume of cash credit to manufacturing industry sector given by domestic banks have been searched for Turkey with 1999-2015 data by using Johansen cointegration test and VECM based Granger causality test. Econometric analysis results show that production and bank credits in the manufacturing industry sector are cointegrated, there is a positive relationship between these variables and causality from production to bank credits in the long run. Analysis results for Turkish manufacturing industry sector support the demand following view stating that financial sector follows real economy.                 Key-words: Manufacturing Industry Sector, Bank Credits, Cointegration, Causality, Vector Error Correction Model (VECM).

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