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Do Financial Systems Converge?
Author(s) -
Antzoulatos Angelos A.,
Panopoulou Ekaterini,
Tsoumas Chris
Publication year - 2011
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2010.00936.x
Subject(s) - economics , convergence (economics) , sample (material) , financial market , capital market , developing country , stock market , indirect finance , bond market , finance , financial system , macroeconomics , paleontology , chemistry , chromatography , horse , biology , economic growth
We apply the new panel convergence methodology developed by Phillips and Sul (2007a) on 13 financial development indices from the World Bank's Financial Development and Structure database, to test for financial system convergence across a large set of industrial and developing countries. Our results indicate that there is no convergence for either the financial systems as a whole or their main segments. Far from decreasing, the differences in the financial systems of the sample countries seemingly persist or even increase over time. These differences are more pronounced for the stock market segment and private credit by banks, and less so for the bond market segment and bank deposits. Moreover, the convergent clubs for most indices transcend the distinction industrial vs developing countries, as well as the distinction bank‐based vs capital‐market‐based financial systems.