Financial Development Convergence: New Evidence for the EU

Central Bank Review 17 (2017) 47e54

8 Pages Posted: 16 May 2017 Last revised: 27 Aug 2017

See all articles by Dilara Kilinc

Dilara Kilinc

Independent

Ünal Seven

Government of the Republic of Turkey - Research Department; IMT Institute for Advanced Studies

Hakan Yetkiner

Izmir University of Economics

Date Written: May 15, 2017

Abstract

This paper aims to investigate whether the banking and stock market measures among European Union countries have been subject to a convergence process in order to verify whether the transition from the European Monetary System to the Single Currency in the last five decades have led to the integration of financial markets. We show that banking and stock market measures tend to converge across the EU over time, and the process is even improved by controlling for the quality of country level institutions and a range of macroeconomic variables. We conclude that there is a degree of success in the financial integration process of EU countries and therefore recommend that the EU accelerates financial integration to completion rather than to slowing the process.

Keywords: Financial integration, Convergence, EU countries, System GMM

JEL Classification: C23, E22, G20, O50

Suggested Citation

Kilinc, Dilara and Seven, Ünal and Yetkiner, I. Hakan, Financial Development Convergence: New Evidence for the EU (May 15, 2017). Central Bank Review 17 (2017) 47e54, Available at SSRN: https://ssrn.com/abstract=2968894

Dilara Kilinc

Independent ( email )

Ünal Seven (Contact Author)

Government of the Republic of Turkey - Research Department ( email )

Istiklal Cad. 10 Ulus
06100 Ankara
Turkey

IMT Institute for Advanced Studies ( email )

Complesso San Micheletto
Lucca, 55100
Italy

I. Hakan Yetkiner

Izmir University of Economics ( email )

Sakarya Cad. No. 156
Balcova
Izmir, 35350
Turkey

HOME PAGE: http://www.hakanyetkiner.com/

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