Abstract:

The global crisis which has arisen from the American housing market in 2007 and has affected the whole world and Turkey has motivated to re-examine current economic policies and its implications. Hyman Minsky explained the concept of instability that resulted from the deterioration of debt-income ratio as the Financial Instability Hypothesis. According to the Financial Instability Hypothesis, the cause of the financial crisis is the fact of excessive loans in the financial system. In the literature, although there have been many theoretical studies on Financial Instability Hypothesis, recently discussed with the global crisis, there have been few studies in which the statistical dimension of the hypothesis was examined. In this study, the relationships between and credit/income rate as financial fragility 6-quarter moving standard deviation of the real GDP as economic stability or instability indicator in Turkey have been analyzed by using VAR approach for the period after 1980.

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