Real estate, especially housing, has an important share in the nationís wealth. For example, real estate constitutes 48.8% of total wealth in the world in 1991. Moreover, housing construction and its financing are two important factors that affect economic development in developed and developing countries. Although the mortgage system has been developing in the 1980s and 1990s in the developing economies, the impact of mortgage credits on the economy has been ignored in the literature. The only study by Erbas and Nothaft (2005), analyzes how mortgage credits affect Mexican and Turkish economies with simulation analysis by using the U.S. housing and mortgage market parameters. They find that mortgage loans will not affect the economic growth over ten year period and explain this finding with crowing out effect. In this paper, we try to close this gap in the literature and study the impact of real estate loans on economic development at province level in Turkey. Considering the unavailability of mortgage financing in Turkey, banks play a major role in growth by providing funds to households and businesses that need financing to purchase real estate. In the analysis, economic development at the province level is measured by several variables, including the GDP growth rate, the new construction of residential buildings and commercial buildings, and rents. The unavailability of house value index restricts us to estimate the impact of these loans on house values. The sample covers 67 provinces in Turkey and the period between 1990 and 2006 is analyzed.