The impact of loan on economic growth in Turkey

The economic theory reveals that the availability of finance is a fundamental condition for supporting economic growth. It includes the establishment and expansion of institutions, tools, and markets that support financial development, investment, and growth. Financial intermediaries play a role to capture resources from the community to channel them in the form of loans to companies with more profitable projects, thereby promoting greater economic growth. The financial sector plays an important and critical role in initiative of economic growth and capital accumulation through lending. In this regard, loans ensure that the funds obtained from these savings are directed to real investments. For economic development and growth in countries, it is imperative that the financial sector develops in parallel with the real sector. The indirect and minimum cost transfer of available funds for investors depends on the sound functioning of the financial sector. Therefore, the role of financial development and availability of bank loans on economic growth is explored more extensively by researchers. The direct relationship between bank loans and economic growth has been examined in the study. The purpose of this issue, its impact on the economic growth of bank loans in Turkey between 2003 and 2020 reveals. The analysis was performed with the help of the Engle-Granger Cointegration method by using quarterly data within the aforementioned years and it was determined that bank loans have positive and significant effects on economic growth in both the long and short term. In addition, the results obtained can be supported by the empirical literature. KEYWORDS: Bank Loans, Economic Growth, The Case of Turkey, Empirical Analysis