This paper seeks to provide some theoretical and empirical answers to the following question: Does the institutional environment affect the causality relationship between banking development and economic growth? In the theoretical part, we develop an endogenous growth model where the...

After the completion of the capital account liberalization in 1989, Turkey recovered from two financial crises which occurred in 1994 and 2000/2001. Focusing on the twin crises dynamics, this paper delves into the roles of the banking system soundness and the political stability in the design of...

We develop a new model that links capital market imperfection to banking emergence and economic growth. It is shown that the banking system emerges endogenously after a first stage of slow economic growth. Interestingly, economic growth increases after the emergence of banking but remains under...