Does Agricultural Credit Usage Contribute to Regional Growth? South-eastern Anatolia Region Case

Abstract

South-eastern Anatolia has the largest agricultural areas and the countryside living in this region are engaged in agriculture. Loans extended to agriculture by banks are considered to contribute to regional development as a support to the sector. In this paper, the relationship between the GDP of the South-eastern region and the loans extended by the banks to the agricultural sector in this region were investigated in the period of 1988-2017. Lee-Strazicich structural break test and Dolado-Lütkepohl and Bootstrapt causality test was applied to determine the causal relationship between the variables in the analysis. Unlike the others this paper contributes to the literature as it examines the effect of agricultural loans on the development of the region and different tests are used. As a result of the study, the breaking years of the series were determined and interpreted economically. In addition, bi-directional causality relationship between regional growth and agricultural loans was determined. It can be said that agricultural loans contributed to regional development in the South-eastern Anatolia region. It can be presented as a policy proposal that increasing the loans extended to the sector in the region. The effectiveness of agricultural loans can be increased by controlling the use of loans by supervision of on-site use of.