Capital market and economic growth nexus: Evidence from Turkey

Coşkun Y., Seven Ü., ERTUĞRUL H. M., Ulussever T.

Central Bank Review, vol.17, no.1, pp.19-29, 2017 (Scopus) identifier

  • Publication Type: Article / Article
  • Volume: 17 Issue: 1
  • Publication Date: 2017
  • Doi Number: 10.1016/j.cbrev.2017.02.003
  • Journal Name: Central Bank Review
  • Journal Indexes: Scopus, TR DİZİN (ULAKBİM)
  • Page Numbers: pp.19-29
  • Keywords: Borsa istanbul, Finance-growth nexus, Growth, Stock market, Turkey
  • Anadolu University Affiliated: No


This study explores the relations between the development level of capital market sub-components, involving mutual/pension funds, corporate bond, stock and government bond markets, and economic growth over the period of 2006:M1 and 2016:M6 in Turkey. We find that there is a long-run cointegrating relationship between capital market development and economic growth and also a unidirectional causality running from capital market development to economic growth. Using ARDL, Markov Switching Regression and Kalman Filter models, we also find that capital market development has asymmetric effects on economic growth where government bond market development is negatively but the aggregated index of other sub-components is positively associated with economic growth.