On Convergence across Transition Economies’ Financial Markets: the Role of Creditor Rights

Simona Benedettini ()

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: Although twenty years have elapsed since the beginning of transition, Eastern European and Central Asian countries are still characterized by remarkably heterogeneous levels of economic development. In the light of the established causal relationship between finance and growth, we perform an absolute and conditional convergence analysis with reference to credit markets’ development to understand whether the lack of convergence in economic performances may also be a side - effect of persistently diversified financial architectures in these transition economies. Our investigation highlights: (i) the occurrence of absolute and conditional convergence; (ii) the existence of appreciable intra - distribution dynamics in the convergence process; and that, when conditioning for cross - country measures of the legal protection of creditors’ rights, (iii) the bankruptcy laws and their enforcement strongly boost credit markets’ average period growth rates.

Keywords: convergence; financial market development; investor protection; rule of law. (search for similar items in EconPapers)
JEL-codes: G15 K22 O16 O47 P51 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:580

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