The effects of financial developments on economic output

The financial developments literature is a highly deep research area. This study aims to make an original contribution to the literature on financial developments. This contribution can come from two channels. The first contribution is the definition of a stylized fact for financial developments. The stylized fact is related to the fact that financial developments increase market liquidity and provide an advantage to the country's economy in international risk distribution. The second contribution includes narrowing the multidimensional structure of financial developments with the principal component analysis method with minimum loss of information and estimating the model created in the form of panel data using the random effects method. As a result of the analyzes, it has been revealed that financial developments have a significant effect on the output level.