Regional Economic Growth and Financial Innovation: Perspectives from the Turkish Banking Sector

Abstract

The study aims to reveal the relationship between financial innovation in the banking sector and economic growth for Statistical Region Units Level-1 (12 regions) and Türkiye's 81 provinces. In the study, annual data from 2010 to 2021 was employed. The Arellano-Bond GMM first differences and Pooled Data approach were used as models. The coefficient of the variable measuring financial innovation in the banking industry was significant and positive for the regions and provinces. The findings suggest that the banking sector's innovative goods and services, led by technical advancements and globalisation, contribute positively to the economies of certain Turkish regions and provinces. These empirical validate Schumpeter's theory and ideas of endogenous growth.