APPLIED FINANCIAL

STATISTICS

TURKEY

Overview

Introduction

Data Explanation

Correlation

Estimate Equation

Hypothesis Testing

Conclusion

Turkey

GDP = 786 billion

18th largest economy

Per capita income is more than

$10000

Data

• GDP per capita is gross domestic product divided by midyear population.

• Broad Money is the sum of currency outside banks, demand, the time, savings and foreign currency deposits, checks, and other securities

• Services include wholesale and retail trade, transport, and government, financial, professional, and personal services.

• Domestic credit provided by the financial sector includes all credit to various sectors

Correlation

0.000

2000.000

4000.000

6000.000

8000.000

10000.000

12000.000

0.000

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Domestic credit provided by

financial sector (% of GDP)

Broad money (% of GDP)

Services, etc., value added (% of

GDP)

GDP per capita (current US$)

EQUATION

GDP = β0 + β 1(Credit) + β 2(M2) + β 3(Services)

GDP = -5358.45 + 52.40(Credit) + 164.44(M2) +35.54(Services)

Hypothesis Testing

1) H0 β 0 = 0

H1 β0 ≠ 0

0.000 < 0.01

2) H0 β 1 = 0

H1 β 1 ≠ 0

0.062>0.01

>0.05

<0.10

3) H0 β 2 = 0

H1 β 2 ≠ 0

0.000 < 0.01

4) H0 β 3= 0

H1 β 3 ≠ 0

0.27>0.01

>0.05

> 0.1

F-Statistics

H0 β 0 = β 1 = β 2 = β 3 = 0

H1 β0 ≠ β1 ≠ β2 ≠ β3 ≠ 0

Probability (F – statistics) = 0.000

0.000<0.01

We reject H0 at the level of 1% because probability value of F statistics is less than all significance levels. We can conclude that the whole model validated significant.

R-squared

• R-squared = 0.8451

• 84% changes in GDP can be explained by independent variables.

• To sum up, using this formula Turkey can increase its GDP by increasing Domestic credit provided by financial sector and Broad Money. However Turkey can’t rely on the formula for the Services.