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Cross–country convergence of financial reforms

Author

Listed:
  • Heckelman, Jac C.

    (Wake Forest University, 122 Carswell Hall, Winston-Salem, NC 27109 USA)

Abstract

Financial liberalization indicators are tested for sigma convergence and divergence. Sigma convergence requires a significant reduction in the dispersion across nations over time whereas sigma divergence entails a significant increase in dispersion. Using the standard deviation and a linear trend, sigma divergence is supported for an index of capital accounts openness, but sigma convergence is supported for an index of domestic financial sector liberalization. Using instead the coefficient of variation, which accounts for the upward trend in each of the measures, strong evidence is found in support of sigma convergence for both measures. This latter result holds for both advanced and developing nations.

Suggested Citation

  • Heckelman, Jac C., 2013. "Cross–country convergence of financial reforms," European Economic Letters, European Economics Letters Group, vol. 2(1), pages 20-23.
    • Handle: RePEc:ris:eueclt:0009
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    More about this item

    Keywords

    Convergence; Financial liberalization; Standard deviation; Coefficient of variation;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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