The Mediterranean Banking Systems: Convergence or Path Dependence?

40 Pages Posted: 11 Nov 2008

Date Written: May 1, 2008

Abstract

This paper studies the convergence of banking indicators in the Mediterranean economies, an area including 19 European, Asian and African countries. We compare banking convergence, measured by the ratios of deposits and loans to GDP, with convergence of per capita income, using 20 European Union countries as control sample. We assembled a large dataset starting from the Sixties. The econometric exercises apply the concepts of beta, sigma convergence and stationarity tests. We also tried to detect the existence of convergence clubs, i.e. subsets of countries that are more similar than the Mediterranean nations as whole. We got three main results. First, in the Mediterranean countries some convergence of banking indicators exists, mainly for deposits, but it is weaker than in the EU countries. Second, per capita income convergence did not take place in the Mediterranean area, while there is evidence of it in the EU countries. Third, splitting the Mediterranean area in smaller set of countries, we found real convergence for the clubs of African and Arab countries, while banking convergence was confirmed for European nations.

Suggested Citation

Affinito, Massimiliano and De Bonis, Riccardo, The Mediterranean Banking Systems: Convergence or Path Dependence? (May 1, 2008). Available at SSRN: https://ssrn.com/abstract=1298892 or http://dx.doi.org/10.2139/ssrn.1298892

Massimiliano Affinito

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Riccardo De Bonis (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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