Convergence and clustering of Tier 1 capital in the European banking sector: a non-linear factor approach
by Nicholas Apergis; Alexandros Gabrielsen; James E. Payne; Paolo Zagaglia
International Journal of Monetary Economics and Finance (IJMEF), Vol. 5, No. 2, 2012

Abstract: This short communication examines the convergence of the Tier 1 capital ratio in the banking sector across the EMU. The study applies the Phillips-Sul convergence and clustering algorithm for 251 European banks over annual periods from 1990 to 2010. The null hypothesis of full convergence is rejected; however, the convergence tests reveal heterogeneity in the Tier 1 capital ratio in the European banking sector, with five distinct clusters.

Online publication date: Tue, 28-Aug-2012

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