The effect of the use of banking products on the informal economy in Turkey

The informal economy is one of the most important problems of developing countries. The informal economy means tax loss for states. Therefore, it is seen as a problem that is tried to be prevented. The informal economy has close ties with the banking sector. The more an economic activity is carried out through the banking system, the more it is recorded and leaves behind traces. On the other hand, it is almost impossible to follow up with cash transactions. Therefore, payment transactions through banking are the main means of preventing the informal economy. In this study, it is aimed to determine the effect of the use of banking products on the informal economy. For this purpose, the effects of the use of debit cards, credit cards, ATMs, POS devices, mobile banking, internet banking on the informal economy were examined. In this study, the size of informal economy of 2002-2016 period was used as annual; the use of debit card, credit card, ATMs and POSs of 2000M1 – 2016M4 was used as monthly; the number of active customers using internet banking for the period 2006Q2-2016Q1 is quarterly. Inflation data are monthly data which obtained from the CBRT between 2002 and 2016 were included in the model as independent control variable. According to the findings; using of debit card, credit card, ATM and internet banking has a significant effect on the informal economy. However, using of POS devices and mobile banking has no significant effect on it. The use of debit cards, credit cards and internet banking have a negative and significant effect on the informal economy while the use of ATMs has a positive and significant effect on it. It was observed that using of debit card, credit card and internet banking decreased the informal economy during the 2nd polynomial period, while the 2nd polynomial coefficient of ATM usage increased the informal economy during the 2nd polynomial period. Keywords: Banking, Banking Products, Informal Economy, MIDAS, Turkish Economy.