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Government debt vs. financial depth dilemma in developing countries: The case of Turkey

Ersoy, İmre (2012) Government debt vs. financial depth dilemma in developing countries: The case of Turkey. Acta Oeconomica, 62 (3). pp. 345-362. ISSN 0001-6373

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Abstract

The aim of this paper is to investigate the impact of banks’ sovereign debt exposures on the financial development of Turkey. Results of the bounds test reveal a long-run and negative equilibrium relationship between banks’ domestic claims on sovereign and financial development, while Granger causality tests display a unidirectional causation from domestic debt to financial depth. Furthermore, stochastic frontier estimations provide evidence for the existence of cost inefficiency channel from government debt portfolios to financial development. The results suggest a need for more conscientious fiscal policy and country specific prudential regulation design for the financial development of Turkey.

Item Type: Article
Subjects: H Social Sciences / társadalomtudományok > H Social Sciences (General) / társadalomtudomány általában
Depositing User: xKatalin xBarta
Date Deposited: 20 Dec 2016 09:22
Last Modified: 20 Dec 2016 09:22
URI: http://real.mtak.hu/id/eprint/43567

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