Financial liberalisation and private investment: evidence from Turkey

Günçavdı, Öner; Bleaney, Michael; McKay, Andy

doi:10.1016/s0304-3878(98)00097-2

Cited by 47 publications

(18 citation statements)

References 9 publications

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“…It is assumed that investment decisions are made by a representative profit‐maximizing firm. A standard neoclassical theory as given by Artus and Muet (1990), Rama (1993) and Günçavdi et al (1998) provides a long‐run level of capital: where is the desired level of capital, Y t is the output, is the user cost of capital, i is the nominal deposit rate, is the rate of capital goods inflation and δ is the rate of depreciation. Because in equilibrium, can be re‐written as the desired investment: …”

Section: Theoretical Modelmentioning

confidence: 99%

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Soft Budget Constraints in EU Transition Economy Enterprises^*

Moore¹

2009

International Finance

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Soft budget constraints (SBCs) can be said to exist in situations where governments rescue loss-making firms in order to guarantee their survival by means of either a direct or an indirect injection of credit. The credit markets of the former socialist economies of Central and Eastern Europe were characterized, in general, by the syndrome of SBCs, whereby resources were often invested inefficiently. This paper empirically analyses the effect of joining the EU, where conditions for membership included the removal of SBCs, on restructuring the traditional financing methods for capital formation in EU transition economy enterprises. In the pre-entry period, enterprises in the transition economies are found to be sensitive to credit in financing capital formation, exhibiting the prevalence of SBCs. However, the cost of capital becomes more important in the post-entry period, which may be seen as a consequence of the reduced prevalence of SBCs, while market-driven interest rates become more important in determining investment.

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Section: Theoretical Modelmentioning

confidence: 99%

“…In order to examine the influence of credit constraints, Günçavdi et al (1998) specify a variable for ‘credit’ in their dynamic model. In this paper, we interpret the effect of credit on investment as a way of measuring the extent to which SBCs are prevalent in finance.…”

Section: Introductionmentioning

confidence: 99%

Soft Budget Constraints in EU Transition Economy Enterprises^*

Moore¹

2009

International Finance

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“…We also allow for a shift in the intercept (otherwise a change in the slope coefficients implies a change in the level of the dependent variable, and this might distort our estimations of the shift in the slope coefficients). Günçavdı et al, 1998, 1999and Günçavdı and McKay, 2003. The coefficient of the cost of capital term, Φ , is significant, but not of the expected sign.…”

Section: Quarterly Bulletin Of the Central Bank Of Turkeymentioning

confidence: 99%

“…It seems that these constraints imposed on coefficients of current investment and its square are rejected by the data. (Günçavdı et al, 1998 and1999).…”

Section: Quarterly Bulletin Of the Central Bank Of Turkeymentioning

confidence: 99%

Financial determinants of private investment in Turkey. An Euler Equation Approach to Time Series

Günçavdı

Bleaney

McKay

2006

Self Cite

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Resumen: Este trabajo emplea un modelo dinámico de inversión derivado de maximizar el valor presente del flujo de efectivo intertemporal de una empresa representativa sujeta a imperfecciones de mercado, restricciones de préstamos de capital, y ajustes de costos de capital. El modelo es usado para probar el rol de las imperfecciones del mercado de capital antes y después de la liberalización financiera llevada a cabo en Turquía. Los resultados demuestran el importante rol de restricciones crediticias en la determinación del gasto en inversión privada y muestran que las reformas financieras de principios de la década de 1980 no han relajado estas restricciones de manera significativa.

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“…Akyüz (1990), for example, shows that the financial reforms were not accompanied by any significant change in the financing behaviour of the corporations and did not lead to a cheap cost of investment. Regarding the impact of financial liberalisation on investment, Günçavdı et al (1998) and(1999) argue that the Turkish economy has benefited from the reform policies in the long run by relaxing credit constraints. Earlier studies (Ritenberg, 1991, Chhibber and van Wijnbergen, 1992, Uygur, 1993 have also found similar results.…”

Section: Introductionmentioning

confidence: 99%

Financial Reforms and the Decomposition of Economic Growth: An Investigation of the Changing Role of the Financial Sector in Turkey

Günçavdı¹,

Küçükçifçi²

2005

Review of Middle East Economics and Finance

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Turkey undertook a far-reaching structural adjustment programme in 1980. As an integral element of this programme, financial liberalisation aimed at increasing domestic savings and directing them efficiently towards financing investment projects, which will be likely to have positive impacts on economic growth. After 20 years the performance of these reforms in financial markets is still a matter of concern among academics. The aim of this paper is to examine the role of the financial sector in the whole economy and to assess the sources of gross output of the sector. By doing that we are able to connect financial reforms with different source of growth, and analyse the impacts of reforms on the production of financial services in the pre-and pro-liberalisation periods. To accomplish this aim, we introduce a new methodology, which is based upon the Leontief's input-output models. The results imply that the production sector of the Turkish economy has increasingly become independent from the use of financial service produced by the banking and insurance sector particularly in the post-reform period. JEL Classification: D57, F14, O16, R15

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Financial liberalisation and private investment: evidence from Turkey

Cited by 47 publications

References 9 publications

Soft Budget Constraints in EU Transition Economy Enterprises^*

Soft Budget Constraints in EU Transition Economy Enterprises^*

Financial determinants of private investment in Turkey. An Euler Equation Approach to Time Series

Financial Reforms and the Decomposition of Economic Growth: An Investigation of the Changing Role of the Financial Sector in Turkey

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Financial liberalisation and private investment: evidence from Turkey

Cited by 47 publications

References 9 publications

Soft Budget Constraints in EU Transition Economy Enterprises*

Soft Budget Constraints in EU Transition Economy Enterprises*

Financial determinants of private investment in Turkey. An Euler Equation Approach to Time Series

Financial Reforms and the Decomposition of Economic Growth: An Investigation of the Changing Role of the Financial Sector in Turkey

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Product

Resources

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Soft Budget Constraints in EU Transition Economy Enterprises^*

Soft Budget Constraints in EU Transition Economy Enterprises^*