The Recent Convergence of Financial Development in Asia

26 Pages Posted: 23 Dec 2015

See all articles by Robert Dekle

Robert Dekle

University of Southern California - Department of Economics

Madhavi Pundit

Asian Development Bank

Date Written: July 2015

Abstract

We construct an index of financial development for 23 Asian economies based on subindices of access, depth, and efficiency of financial institutions and markets and find evidence that economies with weaker financial systems are catching up to the Asian benchmark economies, namely Hong Kong, China; Japan; the Republic of Korea; and Singapore. Gross domestic product (GDP) per capita, aggregate GDP, and mobile subscriptions all increase the growth rate of financial development in Asian economies while institutional factors have insignificant or ambiguous effects. We also evaluate the relative importance of the subindices in delivering high economic growth, low volatility, and greater financial access.

Keywords: Asian economies, convergence to benchmark, financial development, index construction

JEL Classification: C82, G01, G02

Suggested Citation

Dekle, Robert and Pundit, Madhavi, The Recent Convergence of Financial Development in Asia (July 2015). Asian Development Bank Economics Working Paper Series No. 440. Available at SSRN: https://ssrn.com/abstract=2707500 or http://dx.doi.org/10.2139/ssrn.2707500

Robert Dekle

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States
213-740-8335 (Phone)

Madhavi Pundit (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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