One of the fundamental aims of economic policies is to increase capital accumulation in terms of \ninvestment that is necessary to maintain a desirable and sustainable growth rate in the developing \ncountries. The majority of empirical studies show that per capita GDP growth, foreign trade, \ncapital flows, external debt, public sector borrowing requirements, inflation and interest rate \nare the main determinants of investment rate. Recently, there is an increasing emphasis on \nthe role of the financial sector in this process, since a financial system, in essence, mobilizes \nsaving to investment. In particular, it can be argued that a well-functioning and developed \nfinancial system may efficiently mobilize available resources for investment. Therefore, the aim \nof this study is to investigate whether financial development has contributed to an increase \nin investment in Turkey. To reach an empirical and firm conclusion, an investment function, \nincluding the traditional potential determinants along with financial development, is estimated \nby utilizing the developments in the time series econometrics in terms of unit root tests that \nallow structural breaks and co-integration for the period 1970-2009 in Turkey.
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