Nineteenth International Conference on Environmental, Cultural, Economic & Social Sustainability

Abstract

This study explores the pattern of overall financial development convergence for the top (European and Central Asia) and bottom (South Asia) globalized developing regions by employing the LM and RALS-LM unit root tests for the annual data period 1984-2016. We again employ Philips and Sul (PS)’s club convergence approach for measuring the speed of financial development convergence. The results from LM and RALS-LM unit root test validate financial development convergence for all countries included in both the top and bottom globalized developing regions. Though this result is supported by the PS test, but club convergence of overall financial development is present only for the bottom globalized developing region. Surprisingly, these results are also varying by developing regions in the case of financial institutions and financial markets. Interestingly, the speed of financial development convergence is less in the bottom globalized developing region than in the top globalized developing region. It suggests having strong governance in financial markets could provide a productive and efficient functioning financial system for the bottom globalized developing region.