The geography of financial intermediation in Turkey: 1988–2013

Abstract

This study aims to provide an analysis of the evolution of regional financial inequalities in Turkey over the 1988–2013 period. The theoretical premise of the study is the Keynesian view that the nature and the level of development of the banking system and the geography of financial intermediation are imperative to the understanding of regional economic disparities. Exploratory Spatial Data Analysis tools used in the analysis indicate the presence of a statistically significant non-random spatial pattern at the provincial NUTS 3 level for the 2006–2013 period. LISA cluster maps reveal that the southeastern provinces of the country constitute a hot spot of credit activity in this period. Moreover, the evolution of financial inequality indices suggests that this clustering has led to a reduction in regional financial disparities across the country over the period in question. The results of econometric conditional convergence analysis suggest regional beta-convergence in terms of Gross Value Added per Capita but no statistically significant link between beta-convergence and the reduction in financial disparities.