Monetary and financial integration in EU: Convergence or divergence?

Sysoyeva, Larysa

doi:10.21272/fmir.1(2).5-11.2017

Cited by 1 publication

(2 citation statements)

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“…Similarly, Aizenman et al (2013) examine the convergence of FI across US states in the 20th century and finds that FI has been a significant factor in driving income convergence. Sysoyeva (2017) finds evidence in favour of FI convergence in the case of Europe. Another study by Lane and Milesi-Ferretti (2017) summarises and critically evaluates the literature on international FI, with a focus on empirical studies of capital flows and financial globalisation.…”

Section: Introductionmentioning

confidence: 97%

“…Pritchett (2003) further argued that the country's FI varies because of profound historical and geographical reasons. A few studies also examine “does FI leads to income convergence” (see, for instance, Abiad et al , 2009; Kaijage and Nzioka, 2012; Sysoyeva, 2017). Abiad et al (2009) has investigated that FI is helping low-income countries as capital is flying from developed to developing countries using the sample period from 1974 to 2004.…”

Section: Introductionmentioning

confidence: 99%

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A club convergence analysis of financial integration: cross-country evidence

Akram

Singh

Sahoo

2023

SEF

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Purpose The purpose of this study is to examine the club convergence of Financial integration (FI) in the case of 60 countries from 1970 to 2015. FI plays a vital role in economic growth through sharing the risk between countries, cross-border capital association, investment and financial information. It also leads to the efficient allocation of capital and capital accumulation, thereby improving the systematic growth and productivity of the economy. Literature on examining the convergence hypothesis of FI is scarce. Design/methodology/approach This study applies the clustering algorithm to identify club convergence, advanced by the Phillips and Sul test, which enables the identification of multiple steady states or club convergence, unlike beta and sigma convergences. Findings The findings indicate the non-convergence when all 60 countries were taken together. This highlights that the selected countries' have unique transition paths in terms of FI. Hence, the authors implement the clustering algorithm, and the estimation shows that 56 countries are categorised into three different clubs. However, for the rest of four countries, the results are sort of ambiguous, favouring neither convergence nor divergence. Practical implications On the basis of three country clubs, Club 1 presents the model countries such as the Netherlands, Singapore and Switzerland. The Club 2 and Club 3 countries can start making moves towards the model countries by making policy adaptations for trade, finance and business facilitation. Originality/value The existing literature provides a plethora of studies investigating the convergence of stock markets, exchange rates and equity markets, but studies on the convergence of FI, particularly across the countries, are scarce. This study contributes by bridging this gap. The study is unique in its type as it takes into account the multiple steady states or club convergence. This study also contributes in policymaking by suggesting Club 1 countries (the Netherlands, Singapore and Switzerland) as the model ones for the FI.

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Section: Introductionmentioning

confidence: 97%