Assessing financial convergence in developing countries: The case of D-8 countries
The European Union's regional integration serves as a model for blocs such as the D-8 Organisation for Economic Cooperation, which aims to enhance financial and economic integration. This study employs wavelet coherence analysis to examine the interrelations between exchange rates, bond yields,...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2025-07-01
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| Series: | Borsa Istanbul Review |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2214845025000547 |
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| Summary: | The European Union's regional integration serves as a model for blocs such as the D-8 Organisation for Economic Cooperation, which aims to enhance financial and economic integration. This study employs wavelet coherence analysis to examine the interrelations between exchange rates, bond yields, stock exchanges, the VIX, and oil prices in D-8 countries, utilizing daily data from 2010 to 2025 to assess financial convergence. The findings reveal dynamic and heterogeneous financial relationships. Türkiye, Indonesia, and Malaysia exhibit medium-term synchronisation between exchange rates and bond yields, while Bangladesh and Nigeria show inverse relationships. Stock markets also display varied interactions, with Indonesia and Malaysia demonstrating persistent negative correlations, while Türkiye shifts from synchronisation to an inverse relationship. More open economies, like Türkiye and Malaysia, demonstrate stronger coherence with global volatility (VIX), whereas controlled economies, such as Iran, show weaker responses. Although mid-to-long-term coherence suggests progress towards financial convergence, differences in market openness and policies hinder full integration. Policymakers should prioritize coordinating exchange rates, ensuring financial transparency, and harmonising regulations to strengthen stability in D-8 economies. Proactive risk management and regional policy coordination can mitigate the effects of global volatility. Enhancing financial linkages through cross-border investments and regional agreements will improve resilience and speed up convergence. |
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| ISSN: | 2214-8450 |