Analysis of the effect of construction sector loans on economic growth – the case of Turkey

The aim of this study is to determine whether the housing loans extended in Turkey have an effect on economic growth. In this context, the sum of the variables "cash loans" and "non-cash loans" is taken as the volume of loans given to the construction sector, representing Bank loans. These data are taken from the website www.worldbank.org. Thus, a new variable was created by calculating the growth in bank loans given to the construction sector in Turkey between the 2005-2021 periods. This calculation is carried out by obtaining the percentage change experienced by dividing the current year with the previous year. It is used as the abbreviation of this variable as "ISKB". "GDP growth" data is used to represent economic growth. These data were obtained from the database of the BRSA and the World Bank. This data set consists of annual data for the period 2005-2021. In our analysis, the dependent variable will be GDP and our independent variable will be İSKB. On the other hand, Engle-Granger cointegration analysis was used to achieve the aforementioned purpose. According to the results of Granger Causality Analysis, it was concluded that there is bidirectional causality. This result also supports the related literature. According to the results of the VAR analysis, it has been determined that economic growth has a positive effect on the growth in bank loans given to the construction sector, and there is a negative relationship between the growth in bank loans given to the construction sector and economic growth. According to the results of the VAR analysis within the selected periods, it was concluded that the effect of the growth in bank loans to the construction sector on economic growth was negative. Since the investments made in the construction sector are generally long-term investments, their impact on economic growth can be reflected in 5-10 year intervals. This situation is thought to explain the negative relationship between the two variables related to the analyzed periods. In Turkey, which is in the group of developing countries, the construction sector has taken its place as a very important sector for economic growth from past to present and will always have a very important place for the Turkish economy in the coming periods.