TESTING THE VALIDITY OF FINANCIAL CONVERGENCE: EMPIRICAL EVIDENCE FROM NIC COUNTRIES

Ayşe Eryer
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Ayşe Eryer: Kahramanmaraş Sutçu İmam Universitesi

Ekonomi Maliye Isletme Dergisi, 2025, vol. 8, issue 1, 112-124

Abstract: Financial convergence is known as a hypothesis based on the assumption that countries or regions will have similar financial indicators over time. In particular, this hypothesis expresses the expectation that financial systems and markets in different countries will converge due to globalisation, financial liberalisation and economic integration processes. In this context, in this study, the validity of the financial convergence hypothesis in NIC (Brazil, China, Mexico, India, Indonesia, Indonesia, Philippines, South Africa, Thailand and Turkiye) countries within the scope of the data set for the period 1985-2021 is realised through Fourier-based unit root tests. As a result of the Fourier KSS and Fourier Kruse unit root tests based on the financial development index, it was found that the financial convergence hypothesis was not valid in NIC countries in the period under consideration. In other words, the stationarity results of the financial development indices obtained in NIC countries do not converge to the USA. This situation can be interpreted as the tendency of financial systems in these countries to diverge rather than converge despite the increase in global economic integration worldwide. As a result, it can be stated in the study that financial convergence has not occurred in NIC countries and this situation should be taken into account in terms of global financial integration strategies.

Keywords: : Financial Convergence Hypothesis; Unit Root Tests; NIC Countries (search for similar items in EconPapers)
JEL-codes: B23 C22 G10 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:gnx:emid43:2025-8-1-1686503

DOI: 10.46737/emid.1686503

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