This study is to examine the relationship between information and communication technology (ICT) and financial development in the Turkish economy during the period of 1986–2018. By empirical literature, economic growth, technological innovation, and financial globalization are added to the financial development model as explanatory variables. The autoregressive distributed lag (ARDL) model and Hatemi-J cointegration test with two structural breaks are applied to examine the presence of cointegration between the variables. Dynamic ordinary least squares (DOLS), fully modified least squares (FMOLS), and canonical cointegrating regression (CCR) estimation techniques are applied for long-term estimates. The vector error correction model (VECM) Granger causality approach is used for causality analysis. Our empirical results show that under the structural break, ICT, economic growth, technological innovation, and financial globalization are cointegrated with financial development. In the presence of a structural break, ICT and technological innovation negatively affect financial development, while economic growth and financial globalization have a positive impact on financial development. The causality analysis determines that there is a one-way causality relationship running from ICT and economic growth to financial development. In addition, technological innovation and financial globalization lead to long-term financial development. Empirical findings have important policy recommendations for financial development in the Turkish economy.
AgbolaF. W. (2013). Does human capital constrain the impact of foreign direct investment and remittances on economic growth in Ghana?Applied Economics, 45(19), 2853–2862.
2.
AhadM., & DarA. A. (2018). A dynamic relationship between financial development and import demand for Bangladesh: An evidence from combine cointegration and Granger causality approach. Global Business Review, 19(3), 543–555.
3.
AlshubiriF. (2020). Analysis of the financial model of the ICT price basket on financial development indicators of GCC countries. The Review of Socionetwork Strategies, 14, 147–170.
4.
AlshubiriF., JamilS. A., & ElheddadM. (2019). The impact of ICT on financial development: Empirical evidence from the Gulf Cooperation Council countries. International Journal of Engineering Business Management, 11, 1–14.
5.
AndrianaivoM., & KpodarK. (2012). Mobile phones, financial inclusion, and growth. Review of Economics and Institutions, 3(2), 1–30.
6.
AsonguS. A. (2013). How has mobile phone penetration stimulated financial development in Africa?Journal of African Business, 14(1), 7–18.
7.
AsonguS. A., & Acha-AnyiP. N. (2017). ICT, conflicts in financial intermediation and financial access: Evidence of synergy and threshold effects. Netnomics, 18, 131–168.
8.
AsonguS. A., & NwachukwuJ. C. (2019). ICT, financial sector development, and financial access. Journal of the Knowledge Economy, 10, 465–490.
9.
AsonguaS. A., OrimS. M. I., & NtingR. T. (2019). Inequality, information technology and inclusive education in sub-Saharan Africa. Technological Forecasting & Social Change, 146, 380–389.
10.
AyaydınH., ÇamA. V., BarutA. K., & PalaF. (2018). Araştırma geliştirme ve inovasyon yatırımlarının finansal gelişme üzerine etkisi: BRICS-TM ülkeleri örneği. Muhasebe ve Vergi Uygulamaları Dergisi, Özel Sayı, 442–461. https://dergipark-org-tr.translate.goog/tr/pub/muvu/issue/36666/339031?_x_tr_sl=tr&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=sc
11.
BalcılarM., GüngörH., & Williamsi G. O.O. (2019). On the impact of globalization on financial development: A multi-country panel study. European Journal of Sustainable Development, 8(1), 350–364.
12.
BinswangerM. (1999). Stock markets, speculative bubbles, and economic growth: New dimensions in the co-evolution of real and financial markets. Edward Elgar.
13.
ChengC. Y., ChienM. S., & LeeC. C. (2021). ICT diffusion, financial development, and economic growth: An international cross-country analysis. Economic Modelling, 94, 662–671.
14.
ChienM. S., ChengC. Y., & KurniawaM. A. (2020). The non-linear relationship between ICT diffusion and financial development. Telecommunications Policy, 44, 1–14.
15.
ČihákM., Demirgüç-KuntA., FeyenE., & LevineR. (2012). Benchmarking financial development around the world(World Bank Policy Research Working Paper 6175). World Bank.
16.
CoorayA. (2012). Migrant remittances, financial sector development and the government ownership of banks: Evidence from a group of non-OECD economies. Journal of International Financial Markets, Institutions & Money, 22, 936–957.
17.
Saud DanishS., BalochM. A., & LodhiR. N. (2018). The nexus between energy consumption and financial development: Estimating the role of globalization in next-11 countries. Environmental Science and Pollution Research, 25, 18651–18661.
18.
EdoS., OkoduaH., & OdebiyiJ. (2019). Internet adoption and financial development in sub‐Saharan Africa: Evidence from Nigeria and Kenya. African Development Review, 31(1), 144–160.
19.
EjemeyovwiJ. O., OsabuohienE. S., & BowaleE. I. K. (2021). ICT adoption, innovation, and financial development in a digital world: An empirical analysis from Africa. Corporations Review. Transnational Corporations Review, 13(1), 16–31.
20.
EkinciA. (2013). 2001 Krizi sonrası Türkiye ekonomisindeki büyümenin sırrı: Daha liberal bir ekonomi(?). Liberal Düşünce Dergisi, 18(72), 109–126.
21.
EngleR. F., & GrangerC. W. J. (1987). Cointegration and error correction: Representation, estimation, and testing. Econometrica, 55, 251–276.
22.
FelekŞ., YaylaN., & Çevişİ. (2021). Türkiye’ de finansal gelişme ve finansal kırılganlık ilişkisi üzerine bir analiz: 2007–2019. Journal of Yasar University, 16(63), 1164–1184.
23.
Financial Stability Board. (2017). Financial stability implications for Fintech: Supervisory and regulatory issues that merit authorities’ attention. Financial Stability Board.
24.
González-PáramoJ. M. (2017). Financial innovation in the digital age: Challenges for regulation and competition. Revista de Estabilidad Financiera, 32, 9–37.
25.
GregoryA. W., & HansenB. E. (1996). Residual-based tests for cointegration in models with regime shifts. Journal of Econometrics, 70(1), 99–126.
26.
GuJ., GouliamosK., Lobont¸ O.R., & Nicoleta-ClaudiaM. (2021). Is the fourth industrial revolution transforming the relationship between financial development and its determinants in emerging economies?Technological Forecasting & Social Change, 165, 1–6.
27.
GuanJ., KirikkaleliD., BibiA., & ZhangW. (2020). Natural resources rents nexus with financial development in the presence of globalization: Is the ‘resource curse’ exist or myth?Resources Policy, 66, 1–9.
28.
HaseebA., XiaE., SaudS., AhmadA., & KhurshidH. (2019). Does information and communication technologies improve environmental quality in the era of globalization? An empirical analysis. Environmental Science and Pollution Research, 26, 8594–8608.
29.
HatemiJ. A. (2008). Tests for cointegration with two unknown regime shifts with an application to financial market integration. Empirical Economics, 35, 497–505.
30.
HelhelY. (2016). E7 ülkelerinde finansal gelişmenin ar-ge faaliyetleri üzerindeki etkisi. [İşletme Araştırmaları Dergisi]Journal of Business Research-Turk, 8(1), 500–517.
31.
HelhelY. (2017). Küreselleşme ve finansal gelişme arasindaki etkileşimin Türkiye ve BRICS ülkeleri için incelenmesi. Mehmet Akif Ersoy Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 9(20), 158–178.
32.
İbrahimM., & SareY. A. (2018). Determinants of financial development in Africa: How robust is the interactive effect of trade openness and human capital?Economic Analysis and Policy, 60, 18–26.
33.
International Monetary Fund (IMF). (2021). International financial statistic. https://data.imf.org/?sk=4c514d48-b6ba-49ed-8ab9-52b0c1a0179b
34.
JalavaJ., & PhjolaM. (2008). The roles of electricity and ICT in economic growth: Case Finland. Explorations in Economic History, 45, 270–287.
35.
JavidM., & SharifF. (2016). Environmental Kuznets curve and financial development in Pakistan. Renewable and Sustainable Energy Reviews, 54, 406–414.
36.
KhanZ., HussainM., ShahbazM., YangS., & JiaoZ. (2020). Natural resource abundance, technological innovation, and human capital nexus with financial development: A case study of China. Resources Policy, 65, 1–13.
37.
KirmaniM. M., WaniF. A., & SaifS. M. (2015). Impact of ICT on effective financial management. International Journal of Information Science and System, 4(1), 1–14.
38.
KOF Swiss Economic Institute. (2021). Data. https://kof.ethz.ch/en/data.html
39.
KudashevaT., KunitsaS., & MukhamediyevB. (2015). Effects of access to education and information-communication technology on income inequality in Kazakhstan. Procedia-Social and Behavioral Sciences, 191, 940–947.
40.
KyophilavongP., UddinG. S., & ShahbazM. (2016). The nexus between financial development and economic growth in Lao PDR. Global Business Review, 17(2), 303–317.
41.
LechmanE., & MarszkA. (2015). ICT technologies and financial innovations: The case of exchange-traded funds in Brazil, Japan, Mexico, South Korea, and the United States. Technological Forecasting & Social Change, 99, 355–376.
42.
LechmanE., & MarszkA. (2019). ICT-driven economic and financial development analyses of European countries (1st ed.). Elsevier Academic Press.
43.
LiangQ., & TengJ. Z. (2006). Financial development and economic growth: Evidence from China. China Economic Review, 17, 395–411.
44.
LuW. C. (2018). The impacts of information and communication technology, energy consumption, financial development, and economic growth on carbon dioxide emissions in 12 Asian countries. Mitigation and Adaptation Strategies for Global Change, 23, 1351–1365.
45.
MaY., ChenZ., ShinwariR., & KhanZ. (2021). Financialization, globalization, and Dutch disease: Is Dutch disease exist for resources rich countries?Resources Policy, 72, 1–11.
46.
Ministry of Development of the Republic of Turkey. (2014). 2015–2018 information society strategy and action plan. Information Society Department.
47.
MishkinF. S. (2009). Globalization and financial development. Journal of Development Economics, 89, 164–169.
48.
MurariK. (2017). Financial development-economic growth nexus: Evidence from South Asian middle-income countries. Global Business Review, 18(4), 924–935.
49.
MushtaqR., & BruneauC. (2019). Microfinance, financial inclusion and ICT: Implications for poverty and inequality. Technology in Society, 59, 1–19.
50.
NasreenS., MahalikM. K., ShahbazM., & AbbasQ. (2020). How do financial globalization, institutions, and economic growth impact financial sector development in European countries?Research in International Business and Finance, 54, 1–25.
51.
NavarettiG., & PozzoloA. (2017). FinTech and banks: Friends or foes. European Economy, 2, 9–30.
52.
NawazK., LahianiA., & RoubaudD. (2019). Natural resources as blessings and finance-growth nexus: A bootstrap ARDL approach in an emerging economy. Resources Policy, 60, 277–287.
53.
NguyenC. P., SchinckusC., & SuT. D. (2020). The drivers of economic complexity: International evidence from financial development and patents. International Economics, 164, 140–150.
54.
NiebelT. (2018). ICT and economic growth-comparing developing, emerging, and developed countries. World Development, 104, 197–211.
55.
OwolabiO. A., OkuA. R. O., AlejoA., OgunbiyiT., & UbahJ. I. (2021). Access to electricity, information and communications technology (ICT), and financial development: Evidence from West Africa. International Journal of Energy Economics and Policy, 11(2), 247–259.
56.
Owusu-AgyeiS., OkaforG., Chijoke-MgbameA. M., OhalehiP., & HasanF. (2020). Internet adoption and financial development in sub-Saharan Africa. Technological Forecasting & Social Change, 161, 1–13.
57.
OziliP. K. (2018). Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review, 18(4), 329–340.
58.
ParkJ. Y. (1992). Canonical cointegrating regressions. Econometrica, 60(1), 119–143.
59.
ParkY., MengF., & BalochM. A. (2018). The effect of ICT, financial development, growth, and trade openness on CO2 emissions: An empirical analysis. Environmental Science and Pollution Research, 25, 30708–30719.
60.
PatrickH. T. (1966). Financial development and economic growth in underdeveloped countries. Economic Development and Cultural Change, 14, 174–189.
61.
PeeraerJ., & PetegemP. V. (2015). Integration or transformation? Looking in the future of Information and Communication Technology in education in Vietnam. Evaluation and Program Planning, 48, 47–56.
62.
PesaranM. H., ShinY., & SmithR. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289–326.
63.
PhillipsP. (1987). Time series regression with a unit root. Econometrica, 55(2), 277–301.
64.
PhillipsP. C. B., & HansenB. E. (1990). Statistical inference in instrumental variables regression with I(1) processes. The Review of Economic Studies, 57(1), 99–125.
65.
PhillipsP. C. B., & PerronP. (1988). Testing for a unit root in a time series regression. Biometrika, 75(2), 335–346.
66.
PradhanR. P., ArvinM. B., HallJ. H., & NairM. (2016). Innovation, financial development and economic growth in Eurozone countries. Applied Economics Letters, 23(16), 1141–1144.
67.
PradhanaR. P., ArvinM. B., NairM., BennettS., & BahmaniS. (2017). ICT-finance-growth nexus: Empirical evidence from the next-11 countries. Cuadernos de Economía, 40, 115–134.
68.
PradhanR. P., ArvinM. B., & NormanN. R. (2015). The dynamics of information and communications technologies infrastructure, economic growth, and financial development: Evidence from Asian countries. Technology in Society, 42, 135–149.
69.
QamruzzamanM., & KarimS. (2020). ICT investment impact on human capital development through the channel of financial development in Bangladesh: An investigation of quantile ARDL and Toda-Yamamoto test. Academic Journal of Interdisciplinary Studies, 9(5), 112–124.
70.
RitiJ. S., SongD., ShuY., & KamahM. (2017). Decoupling CO2 emission and economic growth in China: Is there consistency in estimation results in analyzing environmental Kuznets curve?Journal of Cleaner Production, 166, 1448–1461.
71.
RodriguezF., & WilsonE. J. (2000). Are poor countries losing the information revolution. The World Bank.
72.
SalahuddinM., & GowJ. (2016). The effects of internet usage, financial development and trade openness on economic growth in South Africa: A time series analysis. Telematics and Informatics, 33, 1141–1154.
73.
SarkarS. (2012). The role of information and communication technology (ICT) in higher education for the 21st century. The Science Probe, 1(1), 30–40.
74.
SavulescuC. (2015). Dynamics of ICT development in the EU. Procedia Economics and Finance, 23, 513–520.
75.
ShahbazM., IslamF., & ButtM. S. (2016). Finance-growth-energy nexus and the role of agriculture and modern sectors: Evidence from ARDL bounds test approach to cointegration in Pakistan. Global Business Review, 17(5), 1037–1059.
76.
ShahbazM., LeanH.-H., & ShabbirM.-S. (2012). Environmental Kuznets curve hypothesis in Pakistan: Cointegration and Granger causality. Renewable and Sustainable Energy Review, 16, 2947–2953.
77.
ShahbazM., MallickH., MahalikM. K., & HammoudehS. (2018). Is globalization detrimental to financial development? Further evidence from a very large emerging economy with significant orientation towards policies. Applied Economics, 50(6), 574–595.
78.
ShahbazM., SbiaR., HamdiH., & OzturkI. (2014). Economic growth, electricity consumption, urbanization and environmental degradation relationship in United Arab Emirates. Ecological Indicators, 45, 622–631.
79.
ShamimF. (2007). The ICT environment, financial sector and economic growth: A cross-country analysis. Journal of Economic Studies, 34(4), 352–370.
80.
ShresthaM. B., & ChowdhuryK. (2007). Testing financial liberalisation hypothesis with ARDL modelling approach. Journal of Applied Financial Economics, 17, 1529–1540.
SolarinS. A., ShahbazM., KhanH. N., & RazaliR. B. (2019). ICT, financial development, economic growth and electricity consumption: New evidence from Malaysia. Global Business Review, 22(4), 941–962.
83.
StockJ. H., & WatsonM. W. (1993). A simple estimator for cointegrating vectors in higher order integrated systems. Econometrica, 4, 783–820.
84.
SvirydzenkaK. (2016). Introducing a new broad-based index of financial development(Working Paper WP/16/5). International Monetary Fund (IMF).
85.
UmarM., JiX., KirikkaleliD., & XuQ. (2020). COP21 roadmap: Do innovation, financial development, and transportation infrastructure matter for environmental sustainability in China?Journal of Environmental Management, 271, 1–10.
86.
VogelsangT. J., & PerronP. (1998). Additional tests for a unit root allowing for a break in the trend at an unknown time. International Economic Review, 39, 1073–1100.
87.
World Bank. (2014). Building integrated markets within the East African Community: EAC opportunities in public–private partnership approaches to the region’s infrastructure needs. The World Bank.
88.
World Bank. (2021). World development indicators. https://databank.worldbank.org/source/world-development-indicators
89.
ZaidiS. A. H., WeiZ., GedikliA., ZafarM. W., HouF., & IftikharY. (2019a). The impact of globalization, natural resources abundance, and human capital on financial development: Evidence from thirty-one OECD countries. Resources Policy, 64, 1–9.
90.
ZaidiS. A. H., ZafarM. W., ShahbazM., & HouF. (2019b). Dynamic linkages between globalization, financial development and carbon emissions: Evidence from Asia Pacific Economic Cooperation countries. Journal of Cleaner Production, 228, 533–543.
