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January 14, 2022
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September 23, 2022
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October 5, 2022
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Abstract

Purpose ― Mishkin’s hypothesis suggests that globalization appears to be a vital factor in stimulating the development of the financial system. The study examines this hypothesis for the Turkish economy from 1970 to 2017. It focuses on the link between financial globalization and financial development by integrating economic growth, inflation, and natural resource rent as additional determinants into the financial development specification.


Methods ― The Ng-Perron and Vogelsang-Perron unit root tests are used to check the stationarity of variables. The cointegration analysis is performed using the Hatemi-J and ARDL bounds testing procedures.


Findings ― The main empirical results show that the series are cointegrated under structural breaks; in the long run, financial globalization and economic growth increase financial development while inflation and natural resource rent negatively affect financial development. A unidirectional causality exists from financial globalization and economic growth to financial development. At the same time, there is bidirectional causality between inflation and financial development, natural resource rent, and financial development.


Implications ― The empirical findings can present important recommendations for policymakers.


Originality ― Very few time-series studies include Turkey’s economy and structural breaks.

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Copyright (c) 2022 PINAR AVCI, MURAT CETIN

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Author Biographies

Pinar Avci, School of Sarköy Vocational in Tekirdag Namik Kemal University, Tekirdag, Turkey

She is a lecturer at School of Sarköy Vocational in Tekirdag Namik Kemal University, Tekirdag, Turkey. She teaches capital market, firm value, financial management and accounting and finance.  She received the B.S. degree in Business Trakya University, 2007, M.S. degree in Business, Trakya University, 2012, and PhD degree in Accounting-Finance, Gazi University, 2019. Her main research interests are financial market and institutions, capital market, firm value, financial management, financial economics and panel data.

Murat Cetin, Faculty of Economics and Administrative Sciences, Tekirdag Namik Kemal University, Tekirdag, Turkey

He is a Professor of Economic Development at Faculty of Economics and Administrative Sciences in Tekirdag Namik Kemal University, Tekirdag, Turkey. Prof. Cetin teaches economic growth and development, macroeconomics, monetary policy related courses. He received the B.S. degree in Economics Karadeniz Teknik University, 1994, M.S. degree in Economics, Karadeniz Teknik University, 1996, and PhD degree in Economics Karadeniz Teknik University, 2000. His main research areas focus on growth economics, financial economics, energy economics, time-series and panel data analyses.

How to Cite
Avci, P., & Cetin, M. (2022). Structural breaks, financial globalization, and financial development: Evidence from Turkey. Economic Journal of Emerging Markets, 14(2), 204–217. https://doi.org/10.20885/ejem.vol14.iss2.art5
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