Time-frequency co-movements between bank credit supply and economic growth in an emerging market: Does the bank ownership structure matter? |
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| Institution: | 1. Department of Banking and Finance, Faculty of Economics and Administrative Sciences, European University of Lefke, Northern Cyprus, via Mersin, 10, Turkey;2. Department of Banking and Finance, Faculty of Business, Girne American University, Northern Cyprus, via Mersin, 10, Turkey;1. Chulalongkorn University, Sasin Graduate Institute of Business Administration, Bangkok, Thailand;2. Chulalongkorn University, College of Population Studies, Bangkok, Thailand;3. Pennsylvania State University, School of Graduate Professional Studies, Malvern, PA, USA;1. School of Finance, Southwestern University of Finance and Economics, Chengdu, Sichuan, PR China;2. School of Economics and Management, Southwest Jiaotong University, Chengdu, Sichuan, PR China;1. Economics Department, The University of Western Australia, and Faculty of Finance, Banking and Business Management, Quy Nhon University, Viet Nam;2. Business and Economics Research Group, Ho Chi Minh City Open University, Viet Nam;1. Graduate School of Economics, Kobe University, 2-1, Rokkodai, Nada-Ku, Kobe 657-8501, Japan;2. The Kansai Electric Power Company, Incorporated, 6-16, Nakanoshima 3-chome, Kita-Ku, Osaka 530-8270, Japan;1. Department of Economics and Finance, College of Economics and Political Science, Sultan Qaboos University, Muscat, Oman;2. South Ural State University, 76, Lenin prospekt, Chelyabinsk, Russian Federation;1. Department of Economics, Faculty of Economics and Administration, King Abdulaziz University, Saudi Arabia;2. Department of Economics and Finance, Southern Illinois University Edwardsville, USA |
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| Abstract: | This study aims to shed some light on the causal link between bank credit supply and economic growth in Turkey for the banks with the different ownership structures between 1993Q4 and 2017Q3. Wavelet coherence test is used to obtain this objective and to answer the following questions: (i) does bank credit supply lead to economic growth in Turkey and vice versa, and (ii) does the bank ownership matters in this linkage? The findings from wavelet coherence reveal that between 1993 and 2003 in the short and medium term, economic growth leads credit supply but in the long run there is feedback causality between credit supply and economic growth for only public and private banks. However, in the long-run between 1993 and 2003 economic growth leads credit supply in the foreign banks in Turkey. Between 2004 and 2017, there is feedback causality between credit supply and economic growth. Moreover, our findings suggest that bank ownership affects the strength of the linkage between credit supply and economic growth in Turkey especially in the short and medium terms. More specially, within the three types of bank ownership, the findings imply that the strongest correlation among the variables is for the private banks while the weakest one is for foreign banks. |
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| Keywords: | Bank credit supply Economic growth Bank ownership Wavelet coherence Turkey Emerging market |
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