Bank Credit and Growth Relationship in NUTS Level 2

Abstract

Bank loans promote economic growth by increasing production and ensuring capital accumulation by ensuring optimized capital allocation. Therefore, it is important to examine the relationship between bank loans and economic growth. The aim of this study is to determine the effect of bank credits on economic growth in the NUTS Level 2 Regions in Türkiye. In the study, 26 regions located in Level 2 Regions were examined in the period 2004-2021. In the study where panel data analysis was made, GDP was chosen as the dependent variable, and loans offered by banks were chosen as the independent variable. According to the CADF test result, it can be said that the GDP variable and the CRD variable are stationary at their level. The results of the Hausman test indicate that the fixed effects model would be used, and as a result, it has been detected that bank loans have a positive effect on growth by region in Türkiye. Banks contribute to the economic development of their countries regionally in Türkiye in terms of lending. Policies should be made in line with the impact of loans provided by banks on GDP growth.