GOVERNMENT DEBT VS. FINANCIAL DEPTH DILEMMA IN DEVELOPING COUNTRIES: THE CASE OF TURKEY

Ersoy İ. S.

ACTA OECONOMICA, cilt.62, sa.3, ss.345-362, 2012 (SSCI) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 62 Sayı: 3
  • Basım Tarihi: 2012
  • Doi Numarası: 10.1556/aoecon.62.2012.3.3
  • Dergi Adı: ACTA OECONOMICA
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
  • Sayfa Sayıları: ss.345-362
  • Anahtar Kelimeler: banks, financial markets, international lending and debt problems, economic growth, bounds test, Granger causality, cost efficiency, Turkey, LED-GROWTH HYPOTHESIS, SECTOR PERFORMANCE, TIME-SERIES, UNIT-ROOT, COINTEGRATION
  • Marmara Üniversitesi Adresli: Evet

Özet

The aim of this paper is to investigate the impact of banks' sovereign debt exposures on the financial development of Turkey. Results of the bounds test reveal a long-run and negative equilibrium relationship between banks' domestic claims on sovereign and financial development, while Granger causality tests display a unidirectional causation from domestic debt to financial depth. Furthermore, stochastic frontier estimations provide evidence for the existence of cost inefficiency channel from government debt portfolios to financial development. The results suggest a need for more conscientious fiscal policy and country specific prudential regulation design for the financial development of Turkey.