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Re-examining the impact of financial intermediation on economic growth: evidence from Turkey
Open accessAbstract
Purpose: This study seeks to investigate the impact of financial intermediation on economic growth in Turkey using annual data spanning 1970–2017. Design/methodology/approach: Based on the results of the augmented Dickey–Fuller and Phillips–Perron unit root tests for stationarity, the authors employ the Autoregressive Distributed Lag (ARDL) bounds testing to cointegration to establish the long-run impact of financial intermediation alongside other control factors on economic growth. The study also examines the short-run relationship between financial intermediation and economic growth by estimating the Error Correction Model (ECM). Findings: The authors’ findings indicate that financial intermediation significantly influences economic growth in both short and long run. However, the effect is positive only in the short run, lending support to the supply-leading hypothesis. Regarding the control variables, the authors observe that while financial openness shows a positive significant impact on economic growth in the long run, gross fixed capital formation matters only in the short run. The results further infer that regardless of the time period, inflation impedes economic growth. Originality/value: In the empirical analysis of the relationship between financial intermediation and economic growth, financial intermediation is always measured using a single variable. The authors argue that such studies could produce bias and misleading results given that a single proxy does not adequately reflect financial intermediation activities. Likewise, such findings may delude policy implementation. To provide a more vivid and robust analysis, the authors employ the Principal Component Analysis (PCA) to construct a composite index for financial intermediation based on three broad measures. The researchers’ are unaware of any study on the financial intermediation–economic growth nexus using a composite index of financial intermediation. Thus, this paper fills this lacuna in the literature.
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“inflation (inf) exhibits a negative and significant impact (-0.0517, p < 0.05), confirming that price instability can hamper economic growth (Yakubu et al., 2021).”
From Remittance–economic growth linkage in Africa: the roles of financial development and inflation (2025) · cites this paper as Yakubu et al., 2021
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Research works printed but not linked: 40
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Cited by
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Remittance–economic growth linkage in Africa: the roles of financial development and inflation
Yakubu, I. N., Issaku, K. M., & Oumarou, S. (2025) · Cogent Social Sciences · doi:10.1080/23311886.2025.2595306 · Cited by 4
“…inflation (inf) exhibits a negative and significant impact (−0.0517, p < 0.05), confirming that price instability can hamper economic growth (Yakubu et al., 2021). internet usage (int) shows an unexpected negative and significant relationship with growth (−0.1073, p < 0.01). this may be due…”
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Metadata
- Authors
- Yakubu, I. N., Abokor, A. H., & Gedik Balay, I.
- Affiliations
- Ankara Yıldırım Beyazıt University (TR)
- Corresponding author
- Yakubu, Ibrahim Nandom
- Venue
- Journal of Economics and Development
- Publisher
- Emerald
- Published
- 2021-03-21
- Volume
- 23
- Issue
- 2
- Pages
- 116-127
- ISSN
- 1859-0020 (ISSN-L)
- 2632-5330
- OpenAlex
- W3135868721
- Cited by
- 28
- References
- 0
- Citations by year
- 2026: 2 · 2025: 6 · 2024: 5 · 2023: 8 · 2022: 3 · 2021: 4
- FWCI
- 7.56
- Type
- journal article
- Language
- en
- Open access
- diamond
- doi.org
- Licence
- Locations
- Journal of Economics and Development (publishedVersion, cc-by)
- AYBU AVESIS (submittedVersion)
- DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion, cc-by-sa)
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
- Keywords
- financial intermediation, economic growth, supply-leading hypothesis, financial openness, gross fixed capital formation, inflation, Turkey
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