CAUSALITY RELATIONSHIP BETWEEN THE CREDITS OF COMMERCIAL AND ISLAMIC BANKS AND ECONOM？C GROWTH: AN ECONOMETRIC ANALYSIS

Nexus between financial development and economic growth is a contemplated issue for years. The purpose of this paper is to investigate the causality relationship between credits of commercial and participation banks (Islamic banks) in Turkey and two economic growth indicators which are gross domestic product and fixed capital formation. For this purpose, Granger causality analysis with Toda-Yamamoto approach was applied and results of the analysis showed that there is two-way causality relationship between commercial banks credits and gross domestic product and one-way causality relationship between commercial banks credits and fixed capital formation which is toward fixed capital formation. And, it was also found that there is no causality relationship between participation (Islamic) banks credits and gross domestic product but participation banks credits is the cause of fixed capital formation