THE RELATIONSHIP BETWEEN TOTAL CREDIT VOLUMES OF TRADITIONAL AND PARTICIPATION BANKS AND ECONOMIC GROWTH IN TURKEY

It is assumed that there is a relationship between economic development and the loans provided by the banks. The purpose of this study is to determine the relationship between credit volumes of traditional and participation banks and gross domestic product (GDP) in Turkey. Johansen Cointegration and Granger Causality test were applied in the study. According to Johansen Cointegration Analysis, there is a long-run relationship between the total credit volume of development and investment banks and GDP. Granger Causality Test results shows that there is one-way causality relation from the total credit volume of development and investment banks to GDP, from GDP to participation banks' total credit volume, and from GDP to total credit volume of the Central Bank of the Republic of Turkey. However, no causality relationship between total loan volumes of deposit banks and GDP was found. It can be said that, contrary to the general belief, the traditional bank credit volume is not the reason for the economic growth