ANALYSIS OF THE RELATIONSHIP BETWEEN FINANCIAL DEVELOPMENT AND GROWTH THROUGH SOLOW MODEL: THE CASE OF TURKEY

In this article financial development and growth relation is examined with the help of the solow model. capital’s diminishing rate of return emphasized in the model was used in explanation for the importance of roles which internatinal capital flows and a developed financial system in that field may play from growth perspective. defining different monetary, loan and security variables belong to turkey economy as indicators of financial development, long-term equilibrium relation with national income was studied. the econometric results support the hypothesis about existence of cointegrating relations between financial development and growth.