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Financial development convergence

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  • Bahadir, Berrak
  • Valev, Neven

Abstract

We show that credit levels relative to GDP and other measures for financial development tend to converge across countries over time. The results are obtained using a broad sample of countries over many years and controlling for the quality of country-level institutions, the efficiency of financial institutions, and a range of macroeconomic variables. While we find evidence for convergence in the broad sample, we show that it levels off when countries reach a medium level of financial development. At high levels of financial development, convergence slows down even more and becomes negligible.

Suggested Citation

  • Bahadir, Berrak & Valev, Neven, 2015. "Financial development convergence," Journal of Banking & Finance, Elsevier, vol. 56(C), pages 61-71.
    • Handle: RePEc:eee:jbfina:v:56:y:2015:i:c:p:61-71
    DOI: 10.1016/j.jbankfin.2015.03.001
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    More about this item

    Keywords

    Financial development; Convergence; Institutions;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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