Abstract

In many economies, private sector credit plays a critical role by productively allocating resources for investment and is considered the engine of economic growth. Bank credit to the private sector promotes economic growth through capital accumulation and technological progress by mobilizing savings, increasing production and optimizing capital allocation. In this respect, it is expected that the determination of the relationship between bank credits and economic growth will shed light on policy makers. The aim of this study is to examine the effect of bank credit and innovation on economic growth in BRICS countries. In the study, which deals with the period of 2001-2020, the analysis was carried out with Westerlund panel cointegration analysis. As a result of the analysis, it has been determined that there is no cointegration relationship between GDP and domestic credits from banks to the private sector and innovation in BRICS countries and the supply-side hypothesis that bank credit causes economic growth in BRICS countries is not valid.

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