Financial Determinants of Investment for Turkey

UÇAN, Okyay and ÖZTÜRK, Özlem (2011) Financial Determinants of Investment for Turkey. Journal of Economic and Social Studies, 1 (1). pp. 83-110. ISSN 1986 – 8502


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One of the fundamental aims of economic policies is to increase capital accumulation in terms of investment that is necessary to maintain a desirable and sustainable growth rate in the developing countries. The majority of empirical studies show that per capita GDP growth, foreign trade, capital flows, external debt, public sector borrowing requirements, inflation and interest rate are the main determinants of investment rate. Recently, there is an increasing emphasis on the role of the financial sector in this process, since a financial system, in essence, mobilizes saving to investment. In particular, it can be argued that a well-functioning and developed financial system may efficiently mobilize available resources for investment. Therefore, the aim of this study is to investigate whether financial development has contributed to an increase in investment in Turkey. To reach an empirical and firm conclusion, an investment function, including the traditional potential determinants along with financial development, is estimated by utilizing the developments in the time series econometrics in terms of unit root tests that allow structural breaks and co-integration for the period 1970-2009 in Turkey.

Item Type: Article
Uncontrolled Keywords: VAR; Unit root; Co-integration; Investment; Financial Development; Turkey
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Depositing User: Mr. Ibrahim Kinal
Date Deposited: 25 Jun 2012 07:50
Last Modified: 25 Jun 2012 07:50

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