ASSESSMENT OF CONVERGENCE PROCESSES OF THE FINANCIAL MARKETS’ DEPTH IN THE EU MEMBER STATES
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The aim of the research is testing the hypothesis on the convergence/equalization of financial market levels in the EU member states in the period 1993-2015. The assumption put forward states that the states that previously demonstrated low values of financial depth indicators, later showed outperforming growth rates of these indicators as compared to the states that initially had a certain relatively high level. At a macro-economic level the depth of a state’s financial market is defined as a total/sum of financial claims and liabilities in relation to GDP, and it shows to what extent corporations, households, and state institutions can finance their activities using financial markets and financial mediators. The relevance of the research is proved by the fact that the deepening of financial markets contributes to the increase in the level of stability and security in the economy, this way allowing to serve growing flows of trans-border capital. Deeper markets can provide alternative sources of financing during international liquidity crises, constraining sharp fluctuations of asset prices and currency exchange rates. The approach offered in the article is orientated towards determining dynamic changes in the development of the financial market in the EU member states. The main analytical apparatus for testing the hypothesis on financial convergence is based on the construction of “Barro regressions”.
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