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The Relationship Between Financial Development and Firm Performance: Sectoral Evidence from Borsa Istanbul

Author

Listed:
  • Mert Topçu

    (Nevşehir Hacı Bektaş Veli University)

  • Beste Selin Öztekin

    (Nevşehir Hacı Bektaş Veli University)

Abstract

This study investigates the relationship between financial development and firm performance in Turkey over the period 1990-2017. To this end, empirical models focus on firms categorized under three sectors to examine the causality nexus between financial development and firm performance using Dumitrescu and Hurlin (2012) heterogeneous panel causality test. Empirical results indicate the common validity of the supply-leading hypothesis for Turkish firms, confirming the response of firm performance to financial development. Sector specific results, on the other hand, reveal that the relationship is volatile across either financial development source or firm performance proxy.

Suggested Citation

  • Mert Topçu & Beste Selin Öztekin, 2021. "The Relationship Between Financial Development and Firm Performance: Sectoral Evidence from Borsa Istanbul," Journal of Finance Letters (Maliye ve Finans Yazıları), Maliye ve Finans Yazıları Yayıncılık Ltd. Şti., vol. 36(116), pages 37-56, October.
    • Handle: RePEc:acc:malfin:v:36:y:2021:i:116:p:37-56
    DOI: https://doi.org/10.33203/mfy.925683
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    More about this item

    Keywords

    Financial development; firm performance; panel causality;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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