The Effect of Sectoral Bank Loans on Economic Growth in Turkey

Abstract

In this study the effect of the loans extended by banks on the growth of the sector on a sectoral basis in the quarter of 2004Q1 and 2021Q2 in Turkey has been examined. The variables used as data in the study are real loans extended by banks to the construction, food, metal, personal loans, textile, transportation and wholesale retail sectors. The VAR method, the Johansen cointegration test and the Engle-Granger causality test were used as methods while performing the analysis. While analyzing whether the loans extended by banks to various sectors have a long-term relationship with growth with the Johansen cointegration test, the direction of these relations was determined with the Engle-Granger Causality test. Finally, the effect of shocks in sectoral loans on economic growth was evaluated by using impulse-response functions. The variables used were obtained from the CBRT (Banks Association of Turkey Risk Center). According to the Johansen cointegration test results, it was determined that there is cointegration between the data in the long term. According to the Engle-Granger test results, at the 10% significance level, there is a one-way causality relationship from GDP to transportation, personal loans and construction in the long run and there is a unidirectional causality relationship in the long run from the metal sector to GDP.