Financial Development and International Trade : Is There a Link?

The author explores a possible link between financial development and trade in manufactures. His theoretical model focuses on the role of financial intermediaries in facilitating large-scale, high-return projects. Results show that economies with b...

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Main Author:	Beck, Thorsten
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ASYMMETRIC INFORMATION AVERAGE COSTS CAPITAL STOCK CENTRAL BANK CENTRAL BANKS CLOSED ECONOMY COMPARATIVE ADVANTAGE COMPETITIVE MARKETS CONSTANT RETURNS CONSTANT RETURNS TO SCALE CONSUMERS CONSUMPTION FUNCTION CONTRACT ENFORCEMENT COUNTRY REGRESSIONS COUNTRY-SPECIFIC EFFECTS CREDIT RATIONING CURRENCY DEBT DEMAND CURVE DEMAND FUNCTIONS DEPOSITS DESCRIPTIVE STATISTICS DEVELOPMENT ECONOMICS DIFFERENTIAL PATHS DISTRIBUTION FUNCTION DYNAMIC PANEL ECONOMETRIC MODEL ECONOMETRICS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC HISTORIANS ECONOMIC REVIEW ECONOMIC STAGNATION ECONOMIC STUDIES ECONOMIC THEORY ECONOMIES OF SCALE EMPIRICAL EVIDENCE EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL TEST EMPLOYMENT ENDOGENOUS VARIABLE EQUILIBRIUM EXOGENOUS VARIABLE EXPECTED RETURN EXPECTED VALUE EXPLANATORY VARIABLES EXPORT SHARE EXPORT SHARES EXPORTS EXTERNAL FINANCE FACTOR ENDOWMENTS FACTOR MARKETS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL SECTOR FINANCIAL SECTORS FINANCIAL SERVICES FINANCIAL SYSTEMS FOOD PRODUCTION FOREIGN PRODUCERS GDP GROWTH PERFORMANCE GROWTH RATE HIGH CORRELATION IMPORTS INCOME INCOME LEVEL INCREASING RETURNS INCREASING RETURNS TO SCALE INSURANCE INTEREST RATE INTERNATIONAL TRADE LIQUIDITY LIQUIDITY CONSTRAINTS LONG-RUN EQUILIBRIUM LONG-RUN IMPACT MACROECONOMIC VARIABLES MACROECONOMICS MARGINAL COST MARGINAL REVENUE MONETARY ECONOMICS MONOPOLISTIC COMPETITION NATURAL RESOURCES NEGATIVE EFFECT NET EXPORTERS 0 HYPOTHESIS OPENNESS POLICY IMPLICATIONS POLICY MAKERS POLICY RESEARCH POLITICAL ECONOMY POSITIVE IMPACT PRICE ELASTICITY PRIVATE SECTOR PRODUCERS PRODUCT DIFFERENTIATION PRODUCT MARKETS PRODUCTION FUNCTION PRODUCTION TECHNOLOGY PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICY REAL GDP REGRESSION RESULTS RELATIVE DEMAND RELATIVE SUPPLY RETURN ON EQUITY SAVINGS SERIAL CORRELATION SIGNIFICANT CORRELATION SPECIALIZATION TERMS OF TRADE TOTAL OUTPUT TRADE BALANCE TRADE FLOWS TRADE PATTERNS TRADE REFORMS UTILITY FUNCTION UTILITY FUNCTIONS WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2001/05/1121295/financial-development-international-trade-link http://hdl.handle.net/10986/19656

id	okr-10986-19656
recordtype	oai_dc
spelling	okr-10986-196562021-04-23T14:03:43Z Financial Development and International Trade : Is There a Link? Beck, Thorsten ASYMMETRIC INFORMATION AVERAGE COSTS CAPITAL STOCK CENTRAL BANK CENTRAL BANKS CLOSED ECONOMY COMPARATIVE ADVANTAGE COMPETITIVE MARKETS CONSTANT RETURNS CONSTANT RETURNS TO SCALE CONSUMERS CONSUMPTION FUNCTION CONTRACT ENFORCEMENT COUNTRY REGRESSIONS COUNTRY-SPECIFIC EFFECTS CREDIT RATIONING CURRENCY DEBT DEMAND CURVE DEMAND FUNCTIONS DEPOSITS DESCRIPTIVE STATISTICS DEVELOPMENT ECONOMICS DIFFERENTIAL PATHS DISTRIBUTION FUNCTION DYNAMIC PANEL ECONOMETRIC MODEL ECONOMETRICS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC HISTORIANS ECONOMIC REVIEW ECONOMIC STAGNATION ECONOMIC STUDIES ECONOMIC THEORY ECONOMIES OF SCALE EMPIRICAL EVIDENCE EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL TEST EMPLOYMENT ENDOGENOUS VARIABLE EQUILIBRIUM EXOGENOUS VARIABLE EXPECTED RETURN EXPECTED VALUE EXPLANATORY VARIABLES EXPORT SHARE EXPORT SHARES EXPORTS EXTERNAL FINANCE FACTOR ENDOWMENTS FACTOR MARKETS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL SECTOR FINANCIAL SECTORS FINANCIAL SERVICES FINANCIAL SYSTEMS FOOD PRODUCTION FOREIGN PRODUCERS GDP GROWTH PERFORMANCE GROWTH RATE HIGH CORRELATION IMPORTS INCOME INCOME LEVEL INCREASING RETURNS INCREASING RETURNS TO SCALE INSURANCE INTEREST RATE INTERNATIONAL TRADE LIQUIDITY LIQUIDITY CONSTRAINTS LONG-RUN EQUILIBRIUM LONG-RUN IMPACT MACROECONOMIC VARIABLES MACROECONOMICS MARGINAL COST MARGINAL REVENUE MONETARY ECONOMICS MONOPOLISTIC COMPETITION NATURAL RESOURCES NEGATIVE EFFECT NET EXPORTERS 0 HYPOTHESIS OPENNESS POLICY IMPLICATIONS POLICY MAKERS POLICY RESEARCH POLITICAL ECONOMY POSITIVE IMPACT PRICE ELASTICITY PRIVATE SECTOR PRODUCERS PRODUCT DIFFERENTIATION PRODUCT MARKETS PRODUCTION FUNCTION PRODUCTION TECHNOLOGY PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICY REAL GDP REGRESSION RESULTS RELATIVE DEMAND RELATIVE SUPPLY RETURN ON EQUITY SAVINGS SERIAL CORRELATION SIGNIFICANT CORRELATION SPECIALIZATION TERMS OF TRADE TOTAL OUTPUT TRADE BALANCE TRADE FLOWS TRADE PATTERNS TRADE REFORMS UTILITY FUNCTION UTILITY FUNCTIONS WEALTH The author explores a possible link between financial development and trade in manufactures. His theoretical model focuses on the role of financial intermediaries in facilitating large-scale, high-return projects. Results show that economies with better developed financial sectors have a comparative advantage in manufacturing industries. He provides evidence for this hypothesis, first proposed by Kletzer and Bardhan (1987), using a 30-year panel of data for 65 countries. Controlling for country-specific effects and possible reverse causality, he shows that financial development exerts a large causal impact on the level of both exports and the trade balance of manufactured goods. 2014-08-26T14:33:38Z 2014-08-26T14:33:38Z 2001-05 http://documents.worldbank.org/curated/en/2001/05/1121295/financial-development-international-trade-link http://hdl.handle.net/10986/19656 English en_US Policy Research Working Paper;No. 2608 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ASYMMETRIC INFORMATION AVERAGE COSTS CAPITAL STOCK CENTRAL BANK CENTRAL BANKS CLOSED ECONOMY COMPARATIVE ADVANTAGE COMPETITIVE MARKETS CONSTANT RETURNS CONSTANT RETURNS TO SCALE CONSUMERS CONSUMPTION FUNCTION CONTRACT ENFORCEMENT COUNTRY REGRESSIONS COUNTRY-SPECIFIC EFFECTS CREDIT RATIONING CURRENCY DEBT DEMAND CURVE DEMAND FUNCTIONS DEPOSITS DESCRIPTIVE STATISTICS DEVELOPMENT ECONOMICS DIFFERENTIAL PATHS DISTRIBUTION FUNCTION DYNAMIC PANEL ECONOMETRIC MODEL ECONOMETRICS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC HISTORIANS ECONOMIC REVIEW ECONOMIC STAGNATION ECONOMIC STUDIES ECONOMIC THEORY ECONOMIES OF SCALE EMPIRICAL EVIDENCE EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL TEST EMPLOYMENT ENDOGENOUS VARIABLE EQUILIBRIUM EXOGENOUS VARIABLE EXPECTED RETURN EXPECTED VALUE EXPLANATORY VARIABLES EXPORT SHARE EXPORT SHARES EXPORTS EXTERNAL FINANCE FACTOR ENDOWMENTS FACTOR MARKETS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL SECTOR FINANCIAL SECTORS FINANCIAL SERVICES FINANCIAL SYSTEMS FOOD PRODUCTION FOREIGN PRODUCERS GDP GROWTH PERFORMANCE GROWTH RATE HIGH CORRELATION IMPORTS INCOME INCOME LEVEL INCREASING RETURNS INCREASING RETURNS TO SCALE INSURANCE INTEREST RATE INTERNATIONAL TRADE LIQUIDITY LIQUIDITY CONSTRAINTS LONG-RUN EQUILIBRIUM LONG-RUN IMPACT MACROECONOMIC VARIABLES MACROECONOMICS MARGINAL COST MARGINAL REVENUE MONETARY ECONOMICS MONOPOLISTIC COMPETITION NATURAL RESOURCES NEGATIVE EFFECT NET EXPORTERS 0 HYPOTHESIS OPENNESS POLICY IMPLICATIONS POLICY MAKERS POLICY RESEARCH POLITICAL ECONOMY POSITIVE IMPACT PRICE ELASTICITY PRIVATE SECTOR PRODUCERS PRODUCT DIFFERENTIATION PRODUCT MARKETS PRODUCTION FUNCTION PRODUCTION TECHNOLOGY PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICY REAL GDP REGRESSION RESULTS RELATIVE DEMAND RELATIVE SUPPLY RETURN ON EQUITY SAVINGS SERIAL CORRELATION SIGNIFICANT CORRELATION SPECIALIZATION TERMS OF TRADE TOTAL OUTPUT TRADE BALANCE TRADE FLOWS TRADE PATTERNS TRADE REFORMS UTILITY FUNCTION UTILITY FUNCTIONS WEALTH
spellingShingle	ASYMMETRIC INFORMATION AVERAGE COSTS CAPITAL STOCK CENTRAL BANK CENTRAL BANKS CLOSED ECONOMY COMPARATIVE ADVANTAGE COMPETITIVE MARKETS CONSTANT RETURNS CONSTANT RETURNS TO SCALE CONSUMERS CONSUMPTION FUNCTION CONTRACT ENFORCEMENT COUNTRY REGRESSIONS COUNTRY-SPECIFIC EFFECTS CREDIT RATIONING CURRENCY DEBT DEMAND CURVE DEMAND FUNCTIONS DEPOSITS DESCRIPTIVE STATISTICS DEVELOPMENT ECONOMICS DIFFERENTIAL PATHS DISTRIBUTION FUNCTION DYNAMIC PANEL ECONOMETRIC MODEL ECONOMETRICS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC HISTORIANS ECONOMIC REVIEW ECONOMIC STAGNATION ECONOMIC STUDIES ECONOMIC THEORY ECONOMIES OF SCALE EMPIRICAL EVIDENCE EMPIRICAL GROWTH LITERATURE EMPIRICAL LITERATURE EMPIRICAL TEST EMPLOYMENT ENDOGENOUS VARIABLE EQUILIBRIUM EXOGENOUS VARIABLE EXPECTED RETURN EXPECTED VALUE EXPLANATORY VARIABLES EXPORT SHARE EXPORT SHARES EXPORTS EXTERNAL FINANCE FACTOR ENDOWMENTS FACTOR MARKETS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL SECTOR FINANCIAL SECTORS FINANCIAL SERVICES FINANCIAL SYSTEMS FOOD PRODUCTION FOREIGN PRODUCERS GDP GROWTH PERFORMANCE GROWTH RATE HIGH CORRELATION IMPORTS INCOME INCOME LEVEL INCREASING RETURNS INCREASING RETURNS TO SCALE INSURANCE INTEREST RATE INTERNATIONAL TRADE LIQUIDITY LIQUIDITY CONSTRAINTS LONG-RUN EQUILIBRIUM LONG-RUN IMPACT MACROECONOMIC VARIABLES MACROECONOMICS MARGINAL COST MARGINAL REVENUE MONETARY ECONOMICS MONOPOLISTIC COMPETITION NATURAL RESOURCES NEGATIVE EFFECT NET EXPORTERS 0 HYPOTHESIS OPENNESS POLICY IMPLICATIONS POLICY MAKERS POLICY RESEARCH POLITICAL ECONOMY POSITIVE IMPACT PRICE ELASTICITY PRIVATE SECTOR PRODUCERS PRODUCT DIFFERENTIATION PRODUCT MARKETS PRODUCTION FUNCTION PRODUCTION TECHNOLOGY PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICY REAL GDP REGRESSION RESULTS RELATIVE DEMAND RELATIVE SUPPLY RETURN ON EQUITY SAVINGS SERIAL CORRELATION SIGNIFICANT CORRELATION SPECIALIZATION TERMS OF TRADE TOTAL OUTPUT TRADE BALANCE TRADE FLOWS TRADE PATTERNS TRADE REFORMS UTILITY FUNCTION UTILITY FUNCTIONS WEALTH Beck, Thorsten Financial Development and International Trade : Is There a Link?
relation	Policy Research Working Paper;No. 2608
description	The author explores a possible link between financial development and trade in manufactures. His theoretical model focuses on the role of financial intermediaries in facilitating large-scale, high-return projects. Results show that economies with better developed financial sectors have a comparative advantage in manufacturing industries. He provides evidence for this hypothesis, first proposed by Kletzer and Bardhan (1987), using a 30-year panel of data for 65 countries. Controlling for country-specific effects and possible reverse causality, he shows that financial development exerts a large causal impact on the level of both exports and the trade balance of manufactured goods.
format	Publications & Research :: Policy Research Working Paper
author	Beck, Thorsten
author_facet	Beck, Thorsten
author_sort	Beck, Thorsten
title	Financial Development and International Trade : Is There a Link?
title_short	Financial Development and International Trade : Is There a Link?
title_full	Financial Development and International Trade : Is There a Link?
title_fullStr	Financial Development and International Trade : Is There a Link?
title_full_unstemmed	Financial Development and International Trade : Is There a Link?
title_sort	financial development and international trade : is there a link?
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2001/05/1121295/financial-development-international-trade-link http://hdl.handle.net/10986/19656
_version_	1764440186612088832

Financial Development and International Trade : Is There a Link?

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