Financial markets and economic growth: An econometrical analysis

ABSTRACTFINANCIAL MARKETS AND ECONOMIC GROWTH:AN ECONOMETRICAL ANALYSISÖzgür AYDOĞUŞDepartment of EconomyAfyonkarahisar Kocatepe University, The Institute of Social SciencesJune 2006Advisor: Assist Prof. Dr. Ahmet NKAYAIn this master thesis, the relationship between financial development andeconomic growth is examined. The purpose of this study is to test the causalrelationship between financial development and economic growth and to find thedirection of causality. For the causality test, we used quarterly data fort the period 1996- 2005. Chapters are organized as follows. First chapter discusses the functions,institions, financal tools, and defination of the financial system. Second chapter definesthe concept of financial development. Second chapter also reviews the theories aboutthe relations between the financial development and economic growth and explains thefinancial structure of Turkey. Finally, in the third chapter the relationship betweenfinancial development and economic growth is analyzed. According to our results, thecausality runs from financial development to economic development in Turkey.