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Volume 16
Issue 2
Title The relationship of foreign direct investments with bank credit volumes and economic growth: The ARDL bounds test approach // Article in press
Author Furkan Yildirim, Filiz Yetiz
Foreign direct investments are of great importance in meeting the outsourcing needs of countries with insufficient domestic savings for investment funding and accelerating economic growth by promoting the banking sector’s credit volume. This study aims to examine the relationship of foreign direct investment in Turkey’s economy with bank credits and economic growth using the quarterly data obtained over the period 2009-2019 via an econometric method. The study utilizes the ARDL Bounds test approach model as the econometric analysis method. The model estimation results determine that there are both short- and long-term relationships among the variables. The obtained results reveal the presence of positive relationships among foreign direct investment, bank credits / total assets, and gross domestic product variables in the short-run. The long-term results are found similar to short-term results. The study concludes that foreign direct inflows affect the banking sector, which is the backbone of the financial sector, creating diversity in credit volume and these effects affect economic growth positively.
Keywords Foreign direct investments, banking sector, bank credits, economic growth, ARDL Bounds Test
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