Convergence Patterns in Financial Development: Evidence from Club Convergence

40 Pages Posted: 24 Dec 2010 Last revised: 4 Feb 2013

See all articles by Nicholas Apergis

Nicholas Apergis

University of Piraeus; University of Derby

Christina Christou

University of Piraeus - Department of Banking and Financial Management

Stephen M. Miller

University of Nevada, Las Vegas - Department of Economics; University of Connecticut - Department of Economics

Date Written: April 22, 2010

Abstract

This paper analyzes the degree of convergence of financial development for a panel of 50 countries. We apply the methodology of Phillips and Sul (2007) to various financial development indicators to assess the existence of convergence clubs. We consider nine such indicators that various researchers use to proxy for the degree of financial development in countries. Overall, the results do not support the hypothesis that all countries converge to a single equilibrium state in financial development. Nevertheless, strong evidence exists of club convergence. Countries demonstrate a high degree of convergence in the sense that they form only two or three converging clubs, depending on the measure of financial development used. We then apply the Phillip-Sul method to per capita output and also find strong evidence of seven distinct convergence clubs in per capita output. Finally, we compare the various convergence clubs associated with financial development indicators to those clubs for per capita output. We conclude that strong evidence supports the correspondence between the convergence clubs for financial development and those for per capita output.

Keywords: economic growth, financial development, convergence clustering approach, financial indicators

JEL Classification: F43, F32, G21, C33

Suggested Citation

Apergis, Nicholas and Christou, Christina and Miller, Stephen M., Convergence Patterns in Financial Development: Evidence from Club Convergence (April 22, 2010). Empirical Economics, 43(3), December 2012. Available at SSRN: https://ssrn.com/abstract=1730778 or http://dx.doi.org/10.2139/ssrn.1730778

Nicholas Apergis

University of Piraeus ( email )

Karaoli and Dimitriou 80
80 KARAOLI & DIMITRIOU STREET
Piraeus, Attiki 18534
Greece

University of Derby ( email )

Kedleston Road
Derby, Derbyshire DE22 1GB
United Kingdom

Christina Christou

University of Piraeus - Department of Banking and Financial Management

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

Stephen M. Miller (Contact Author)

University of Nevada, Las Vegas - Department of Economics ( email )

4505 S. Maryland Parkway
Box 456005
Las Vegas, NV 89154
United States
702-895-3776 (Phone)
702-895-1354 (Fax)

HOME PAGE: http://faculty.unlv.edu/smiller/

University of Connecticut - Department of Economics

365 Fairfield Way, U-1063
Storrs, CT 06269-1063
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
74
Abstract Views
717
rank
321,980
PlumX Metrics