Do Financial Systems Converge?

15 Pages Posted: 24 Jan 2011

See all articles by Angelos A. Antzoulatos

Angelos A. Antzoulatos

University of Piraeus - Department of Banking and Financial Management

Ekaterini Panopoulou

Essex Business School

Chris Tsoumas

Hellenic Open University

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Date Written: January 18, 2011

Abstract

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.

Suggested Citation

Antzoulatos, Angelos A. and Panopoulou, Ekaterini and Tsoumas, Chris, Do Financial Systems Converge? (January 18, 2011). Review of International Economics, Vol. 19, Issue 1, pp. 122-136, 2011, Available at SSRN: https://ssrn.com/abstract=1745800 or http://dx.doi.org/10.1111/j.1467-9396.2010.00936.x

Angelos A. Antzoulatos (Contact Author)

University of Piraeus - Department of Banking and Financial Management ( email )

80 Karaoli & Dimitriou Str.
18534 Piraeus, 185 34 -GR
Greece

Ekaterini Panopoulou

Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Chris Tsoumas

Hellenic Open University ( email )

Parodos Aristotelous 18
26335 Patra
Greece

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