Journal of Advances in Economics and Finance

Do the Business Cycles and Financial Cycles Move Together in Turkey?

Download PDF (443.5 KB) PP. 19 - 26 Pub. Date: May 8, 2018

DOI: 10.22606/jaef.2018.32001

Author(s)

Bekir Tamer Gökalp^*
Independent Researcher and Deputy Manager at Odeabank, Turkey

Abstract

In this paper, we analysed the relationship between the financial and business cycles for the Turkish economy. The quarterly data covers from 2002:Q1 to 2017:Q1. In the paper, we employed HP filter, the concordance index method and dynamic conditional correlation method in order to capture the characteristics of the relationships of the cycles. Our empirical findings showed that the financial and business cycles are highly synchronized in Turkey as found by many economists. The results also indicate that the credit volume cycle is leading the GDP cycle while the GDP cycle is lagging the BIST100 cycle. These findings imply that financial variables have strong impact on real economic activities in Turkey. Therefore, policymakers should pay attention to the financial issues in order to stabilize the economic developments.

Keywords

Synchronization, HP filter, business cycle, financial cycle, CI, DCCs

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