This study differs from the frequently used multi-country, short-horizon designs in the literature by covering the period 1990-2021 for Türkiye. More importantly, instead of reducing financial development to a single proxy, it enhances the robustness of the results by employing a composite financial development index that jointly captures the banking and market dimensions, thereby mitigating proxy-sensitivity problems. Econometrically, testing the long-run common relationship through the multivariate Johansen cointegration approach and triangulating it with three different parametric long-run estimators FMOLS, DOLS, and CCR provides a stronger robustness architecture than evidence based on a single method, and confirms the reliability of the elasticities. The research seeks to assess the impact of financial development on economic growth by taking into account critical macroeconomic factors. A rigorous methodological framework is adopted through the use of the Johansen Cointegration model. To provide a comprehensive economic assessment, the study incorporates control variables such as capital formation, labor force, and public expenditures. The empirical results reveal a significant and negative long-run relationship between financial development and economic growth in Türkiye. On the other hand, capital formation, labor force, and public expenditures positively affect economic growth in the long run. The findings highlight the critical role of skilled labor, capital accumulation, and public spending in Türkiye’s growth process, while also unveiling the adverse effects of the financial sector. By offering a comprehensive and up-to-date analysis of Türkiye’s economic outlook, this study contributes to the ongoing discussion on financial development and economic growth.
Ahmet Kadiroğlu*, Nihat Altuntepe, Hidayet Gizem Ünlü Ören (Sun,) studied this question.