Relationship between Loans and Export in Turkey: Comparative Analysis of Islamic and Conventional Banks

Abstract

Financial flows have a potential to influence the economic activity and exports. In this study, causality relationships between both total loans and medium-long term loans and exports were investigated by the Toda-Yamamoto method for various exporting manufacturing industries in Turkey for the period 2006-2019. Although the share of funds directed to the real sector and production is low for Islamic banks, the loans supplied by Islamic banks have a stronger causal effect on exports compared to conventional banks.