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Examine the Effects of Inflation and Banking Sector Indicators Performance on GDP Growth Annually: Case Study Turkey
Article Number: SIS127509AI120223
12th February, 2023
Author(s):
Collins Adu Takyi
Abstract:
The GDP growth in Turkey 2018 decline abnormally as a result of the Turkish Lira (TL) depreciation against United State dollar($) quarterly 2018. In view of that, the researcher investigated into the effects of inflation and banking sector indicators performance on the GDP growth on Turkish’s economy. The study used quarterly data from secondary data source between 2009q1 to 2018q4 and investigated the data with Johansson Approach to Cointegration. Data for the study were analyzed with Augmented Dicky Fuller (ADF) test and the findings revealed that the variables of interest was stationary at their first difference level. Also, the study further used Johansson Cointegration approach to determine if there is Cointegration among the variables and surprisingly the result showed that there is long run relationship among the GDP growth and the explanatory variables. The study found that there is long run and positive relationship existence between the interest rate, cash reserve required, bonds, treasury bill and GDP growth of Turkish's economy. While the variables such as consumer price index (CPI),
producer price index (PPI), deposits and real exchange rate showed statistically insignificant on GDP growth of Tukey. Meaning that these variables have negative impact on the Turkish’s GDP growth. Again the findings concluded that inflation has negative impact on GDP growth of Turkey likewise the banking sectors indicators such as interstate, cash reserve required, bonds, treasury bill have positive impact on the economic growth of Turkey. Finally, the
findings proofed that every 1% increase in the Turkey banking sector indicators in this study induce rapid growth on the economy whereas every 1% increase in inflation indicators like consumer price index(CPI),producer price index (PPI) drastically decline the GDP growth in a rapid level in Turkey.