The effects of financial development on trade performance and the role of institutions
AbstractThis paper aims to address the empirical question of whether a country's level of manufacturing trade is affected by its financial sector development and to investigate the role of institutions in this relationship. Countries endowed with better-developed financial systems tend to specialize in industries that rely on external finance in production. This effect is likely to be stronger in countries with high-quality institutions. Using cross-sectional and panel specifications on a sample of 75 countries over the period 1971-2010, we find that financial development strongly and robustly exerts a positive effect on manufacturing exports, even after controlling for the effect of banking crises. Furthermore, institutional quality is found to have a favorable effect on the extent to which finance influences manufacturing trade, suggesting a multiplicity of experiences of the largest exporters of manufactured goods.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 32 (2012)
Issue (Month): 3 ()
Contact details of provider:
Financial Development; Manufacturing Exports; Comparative Advantages; Institutional Quality;
Other versions of this item:
- Youssouf KIENDREBEOGO, 2012. "The E ffects of Financial Development on Trade Performance and the Role of Institutions," Working Papers 201235, CERDI.
- Youssouf KIENDREBEOGO, 2012. "The Effects of Financial Development on Trade Performance and the Role of Institutions," Working Papers halshs-00748544, HAL.
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bose, Niloy & Murshid, Antu Panini & Wurm, Martin A., 2012. "The Growth Effects of Property Rights: The Role of Finance," World Development, Elsevier, vol. 40(9), pages 1784-1797.
- Do, Quy-Toan & Levchenko, Andrei A., 2007.
"Comparative advantage, demand for external finance, and financial development,"
Journal of Financial Economics,
Elsevier, vol. 86(3), pages 796-834, December.
- Do, Quy-Toan & Levchenko, Andrei A., 2006. "Comparative advantage, demand for external finance, and financial development," Policy Research Working Paper Series 3889, The World Bank.
- R Blundell & Steven Bond, .
"Initial conditions and moment restrictions in dynamic panel data model,"
W14&104., Economics Group, Nuffield College, University of Oxford.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- Huang, Yongfu & Temple, Jonathan, 2005.
"Does External Trade Promote Financial Development?,"
CEPR Discussion Papers
5150, C.E.P.R. Discussion Papers.
- Yongfu Huang & Jonathan Temple, 2005. "Does external trade promote financial development?," Bristol Economics Discussion Papers 05/575, Department of Economics, University of Bristol, UK.
- Baltagi, Badi H. & Demetriades, Panicos O. & Law, Siong Hook, 2009.
"Financial development and openness: Evidence from panel data,"
Journal of Development Economics,
Elsevier, vol. 89(2), pages 285-296, July.
- Badi H. Baltagi & Panicos O. Demetriades & Siong Hook Law, 2008. "Financial Development and Openness: Evidence from Panel Data," Center for Policy Research Working Papers 107, Center for Policy Research, Maxwell School, Syracuse University.
- Svaleryd, Helena & Vlachos, Jonas, 2005. "Financial markets, the pattern of industrial specialization and comparative advantage: Evidence from OECD countries," European Economic Review, Elsevier, vol. 49(1), pages 113-144, January.
- Francois, Joseph & Manchin, Miriam, 2013.
"Institutions, Infrastructure, and Trade,"
Elsevier, vol. 46(C), pages 165-175.
- Joseph F. Francois & Miriam Manchin, 2007. "Institutions, infrastructure, and trade," Economics working papers 2007-05, Department of Economics, Johannes Kepler University Linz, Austria.
- Joseph Francois & Miriam Manchin, 2007. "Institutions, Infrastructure, and Trade," IIDE Discussion Papers 20070401, Institue for International and Development Economics.
- Francois, Joseph & Manchin, Miriam, 2007. "Institutions, infrastructure, and trade," Policy Research Working Paper Series 4152, The World Bank.
- Francois, Joseph & Manchin, Miriam, 2007. "Institutions, Infrastructure and Trade," CEPR Discussion Papers 6068, C.E.P.R. Discussion Papers.
- Joseph Francois & Miriam Manchin, 2007. "Institutions, Infrastructure, and Trade," Working Papers 77, CENTRE FOR THE STUDY OF ECONOMIC AND SOCIAL CHANGE IN EUROPE,School of Slavonic and East European Studies,University College London (SSEES,UCL).
- Joseph Francois & Miriam Manchin, 2007. "Institutions, Infrastructure and Trade," Development Working Papers 224, Centro Studi Luca d\'Agliano, University of Milano.
- Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
- Kenneth Kletzer and Pranab Bardhan., 1986.
"Credit Markets and Patterns of International Trade,"
Economics Working Papers
8612, University of California at Berkeley.
- Kletzer, Kenneth & Bardhan, Pranab, 1987. "Credit markets and patterns of international trade," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 57-70, October.
- Kletzer, Kenneth & Bardhan, Pranab, 1986. "Credit Markets and Patterns of International Trade," Department of Economics, Working Paper Series qt1g36f3sd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Iacovone, Leonardo & Zavacka, Veronika, 2009. "Banking crises and exports : lessons from the past," Policy Research Working Paper Series 5016, The World Bank.
- Fabian Valencia & Luc Laeven, 2012. "Systemic Banking Crises Database: An Update," IMF Working Papers 12/163, International Monetary Fund.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.