Abstract
Along with the integration of money and capital markets, macroeconomic variables such as growth and inflation, which are among the indicators of macroeconomic stability, are also among the determinants of financial development in developed and developing countries. The relationship between financial development and growth is mostly explained by the process of transferring savings to investments in the literature. In endogenous growth theories, financial development is taken as an indicator of growth.
Highlights
Among the main objectives of the economic policy, besides ensuring price stability and growth, economic stability, there are fair income distribution, efficiency in resource distribution, and ensuring balance in the balance of payments
Depending on the decrease in financial returns in inflationary periods, investments are directed from the financial sector to the real sector and it is expressed as the Tobin effect, where capital accumulation will increase (Karabulut, 2019: 172)
It is argued that inflation, which is defined as the increase in the general level of prices, will cause an increase in capital accumulation and an increase in capital accumulation will cause an increase in growth
Summary
Among the main objectives of the economic policy, besides ensuring price stability and growth, economic stability, there are fair income distribution, efficiency in resource distribution, and ensuring balance in the balance of payments. According to the third hypothesis, it is claimed that there is a bidirectional causality relationship between financial development and economic growth, which expresses that real and financial sectors encourage each other's development. The fourth approach is the hypothesis led by Lucas (1988) and Stern (1989), which states that there is no causal relationship between financial development and economic growth, that is, the two variables are independent from each other (Al-Yousif, 2002: 132; Hayaloglu, 2015: 132). Achy, (2004), Chang (2002), Acaravci et al (2009), on the other hand, concluded that financial development does not have an important role in the economic growth process for the period examined in the studies and for the countries and country groups discussed. Financial development is an indicator of economic growth (Turkmen and Agir, 2020: 578)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Journal of Economics, Finance And Management Studies
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
