ISLAMIC FINANCE AND ECONOMIC GROWTH: AN ECONOMETRIC APPLICATION ON TURKEY

This paper investigates the relationship between Islamic finance and economic growth for the period 2005: Q4-2015 :Q2 in Turkey. In this context, firstly, the paper employs unit root tests and cointegration tests with structural breaks. Then, the paper considers long run impact of Islamic finance on economic growth in Turkey through dynamic ordinary least squares estimation and Granger causality test based on vector error correction. The cointegration test, dynamic ordinary least squares estimator and causality test results show that Islamic finance has a positive and unidirectional impact on economic growth in Turkey. This results exhibit that Islamic finance has a significant effect on economic growth in Turkey