Investigating the Effects of Instability in Financial Development Policies and Inflation Uncertainty on Economic Growth of Agricultural Businesses

Financial fragility causes financial crisis and subsequent decline in economic growth. Therefore, this study aimed at investigating the effects of instability in financial development policies and inflation uncertainty on the economic growth of agricultural businesses with emphasis on employment and entrepreneurship. Thus, it was an applied research in terms of its purpose and a descriptive study in terms of its nature. The research was done in the form of a library study using quarterly data from 2013 to 2019. Econometric methods including the Dickey-Fuller unit root test and the moving average method were used to estimate exchange rate fluctuations as well as the Johansson-Juselius method or the vector autoregression method with distributive intervals based on the stationary and unit root of the variables was used. The research findings indicated that in the short term, increasing inflation uncertainty reduced the economic growth of agricultural businesses by 6.19 percent. Therefore, it can be concluded that the instability of financial development policies and the uncertainty of inflation cause businesses to have difficulty in their decisions and fail to predict and plan their future activities as well as disrupt the production process of firms in the economy of the agricultural sector. According to the study results, the government should avoid financial liberalization before providing infrastructure, and increase agricultural exports and economic growth through trade liberalization.