SavedAdd your journal

Journals / İktisadi ve İdari Yaklaşımlar Dergisi / 2026 / Cilt: 8 Sayı: 1

The Link between FDI and Financial Development in Turkish Economy

Türkiye Ekonomisinde Doğrudan Yabancı Yatırımlar ve Finansal Gelişme İlişkisi

Sevgi Sumerli Sarıgül, Murat Çetin

Pages
46–56
Publication Date
2026-06-30
🏛️Bibliographic metadata and full text access for this article are provided via DergiPark.
DergiPark Record ↗

Abstract

The literature identifies foreign direct investment (FDI) as one of the key determinants of financial development. This study aims to test the FDI-led financial development hypothesis for the Turkish economy. Financial development is treated as the dependent variable, and, consistent with the literature, urbanization, industrialization, and gross fixed capital formation are incorporated into the model alongside FDI. The analysis accounts for time-series properties: the stationarity of the series is examined using the ADF and PP unit root tests. The existence of a long-run relationship among the variables is investigated using the ARDL bounds testing approach, and long-run coefficients are estimated via the FMOLS and CCR estimators. In addition, causal linkages among the variables are analyzed using the Granger causality test. The findings indicate the presence of a long-run cointegration relationship among the variables. In the long run, FDI, urbanization, and industrialization positively affect financial development, whereas gross fixed capital formation exerts a negative effect. The causality results suggest a bidirectional relationship between industrialization and financial development. Overall, the results may contribute to policy design aimed at strengthening the financial sector in Türkiye.

Özet

Literatür finansal gelişmenin temel belirleyicilerinden biri olarak doğrudan yabancı yatırımları (DYY) göstermektedir. Bu çalışma, DYY odaklı finansal gelişme hipotezini Türkiye ekonomisi için test etmeyi amaçlamaktadır. Çalışmada finansal gelişme bağımlı değişken olarak ele alınırken, literatürle uyumlu biçimde DYY’nin yanı sıra kentleşme, endüstrileşme ve sabit sermaye oluşumu değişkenleri modele dâhil edilmiştir. Analiz sürecinde zaman serisi özellikleri dikkate alınmış; serilerin durağanlık düzeyleri ADF ve PP birim kök testleri ile incelenmiştir. Değişkenler arasındaki uzun dönem ilişkisinin varlığı ARDL sınır testi ile araştırılmış, uzun dönem katsayıları ise FMOLS ve CCR tahmincileri yardımıyla tahmin edilmiştir. Ayrıca değişkenler arasındaki nedensellik ilişkisi Granger nedensellik testi ile analiz edilmiştir. Elde edilen bulgular, değişkenler arasında uzun dönemli bir eşbütünleşme ilişkisinin bulunduğunu göstermektedir. Uzun dönem sonuçlarına göre DYY, kentleşme ve endüstrileşme finansal gelişmeyi pozitif yönde etkilerken, sabit sermaye değişkeninin negatif etkisi tespit edilmiştir. Nedensellik bulguları ise endüstrileşme ile finansal gelişme arasında çift yönlü bir ilişkiye işaret etmektedir. Çalışma sonuçları, Türkiye’de finansal sektörün güçlendirilmesine yönelik politika tasarımlarına katkı sunabilecek niteliktedir.

Keywords
🔖

Cite This Article

Sarıgül, S. S., Çetin, M. (2026). The Link between FDI and Financial Development in Turkish Economy. İktisadi ve İdari Yaklaşımlar Dergisi, Cilt: 8 Sayı: 1, 46–56. https://doi.org/10.47138/jeaa.1897635

📄 Full Text PDF Viewer

References (23)

  1. Aibai, A., Huang, X., Luo, Y., & Peng, Y. (2019). Foreign direct investment, institutional quality, and financial development along the Belt and Road: An empirical investigation. Emerging Markets Finance and Trade, 55(14), 3275–3294. https://doi.org/10.1080/1540496X.2018.1559139
  2. Alfaro, L., Kalemli-Ozcan, S., & Sayek, S. (2009). FDI, productivity, and financial development. The World Economy, 32(1), 111–135. https://doi.org/10.1111/j.1467-9701.2009.01159.x
  3. Baltagi, B. H., Demetriades, P. O., & Law, S. H. (2009). Financial development and openness: Evidence from panel data. Journal of Development Economics, 89(2), 285–296. https://doi.org/10.1016/j.jdeveco.2008.06.006
  4. Cleeve, E. A., Debrah, Y., & Yiheyis, Z. (2015). Human capital and FDI inflow: An assessment of the African case. World Development, 74, 1–14. https://doi.org/10.1016/j.worlddev.2015.04.003
  5. Çetin, M., & Şeker, F. (2014). Ticari açıklık ve finansal gelişmenin doğrudan yabancı yatırımlar üzerindeki etkisi: OECD ülkeleri üzerine dinamik panel veri analizi. Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, 28(1), 125–147.
  6. Dickey, D. A., & Fuller, W. A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366a), 427–431. https://doi.org/10.1080/01621459.1979.10482531
  7. El Fakiri, A., & Cherkaoui, K. (2022). Foreign direct investment and financial development in selected MENA region countries: Panel ARDL approach. Global Journal of Emerging Market Economies, 16(1), 64–80. https://doi.org/10.1177/09749101221129387
  8. Faisal, F., Majid, P., & Tursoy, M. T. (2016). Impact of economic growth, foreign direct investment and financial development on stock prices in China: Empirical evidence from time series analysis. International Journal of Economics and Financial Issues, 6(4), 1998–2006.
  9. Gökçeli, E. (2023). Effect of foreign direct investment on financial development: The case of OECD. Sakarya Üniversitesi İktisat Dergisi, 12(1), 110–124. https://dergipark.org.tr/tr/pub/sid/article/1270922
  10. Granger, C. W. J. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 37(3), 424–438. https://doi.org/10.2307/1912791
  11. Haque, M. A., Zhang, B., & Muhammad, U. A. (2022). Sources of financial development and their impact on FDI inflow: A panel data analysis of middle-income economies. Economies, 10(8), 182. https://doi.org/10.3390/economies10080182
  12. Hermes, N., & Lensink, R. (2003). Foreign direct investment, financial development and economic growth. The Journal of Development Studies, 40(1), 142–163. https://doi.org/10.1080/00220380412331293707
  13. Kinda, T. (2010). Increasing private capital flows to developing countries: The role of physical and financial infrastructure in 58 countries, 1970–2003. Applied Econometrics and International Development, 10(2), 57–72.
  14. Majeed, A., Jiang, P., Ahmad, M., Khan, M. A., & Olah, J. (2021). The impact of foreign direct investment on financial development: New evidence from panel cointegration and causality analysis. Journal of Competitiveness, 13(1), 95–112. https://doi.org/10.7441/joc.2021.01.06
  15. Mashrur, F. A. (2025). Foreign direct investment, trade openness, financial development, and economic growth dynamics: Empirical evidence from Bangladesh. European Journal of Development Studies, 5(1), 43–51.
  16. Park, J. Y. (1992). Canonical cointegrating regressions. Econometrica, 60(1), 119–143. https://doi.org/10.2307/2951679 Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616
  17. Pham, H. T., Gan, C., & Hu, B. (2022). Causality between financial development and foreign direct investment in Asian developing countries. Journal of Risk and Financial Management, 15(5), 195. https://doi.org/10.3390/jrfm15050195
  18. Phillips, P. C. B., & Hansen, B. E. (1990). Statistical inference in instrumental variables regression with I(1) processes. The Review of Economic Studies, 57(1), 99–125. https://doi.org/10.2307/2297545
  19. Phillips, P. C. B., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335–346. https://doi.org/10.1093/biomet/75.2.335
  20. Soumaré, I., & Tchana Tchana, F. (2015). Causality between FDI and financial market development: Evidence from emerging markets. The World Bank Economic Review, 29(suppl_1), S205–S216. https://doi.org/10.1093/wber/lhv015
  21. Tran, V. N. A., & Huynh, C. M. (2022). The impact of foreign direct investment on financial development in Asian countries (MPRA Paper No. 114311). Munich Personal RePEc Archive. https://mpra.ub.uni-muenchen.de/114311/
  22. World Bank. (2025). World Development Indicators. https://databank.worldbank.org/source/world-development-indicators
  23. Zadeh, H. A., & Madani, Y. (2012). Financial market development, FDI and economic growth in Iran. Journal of Basic and Applied Scientific Research, 2(1), 228–230.