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Financial development convergence

Berrak Bahadir and Neven Valev

Journal of Banking & Finance, 2015, vol. 56, issue C, 61-71

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.

Keywords: Financial development; Convergence; Institutions (search for similar items in EconPapers)
JEL-codes: G01 E22 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.jbankfin.2015.03.001

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