Advanced Search
MyIDEAS: Login to save this paper or follow this series

Does external trade promote financial development?

Contents:

Author Info

  • Yongfu Huang
  • Jonathan Temple

    ()

Abstract

Several recent papers have argued that trade and financial development may be linked, either for political economy reasons, or because foreign competition and exposure to shocks lead to changes in the demand for external finance. In this paper we use the cross-country and time-series variation in openness to study the relationship between trade and finance in more detail. Our results suggest that increases in goods market openness are typically followed by sustained increases in financial depth.

Download Info

If 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.
File URL: http://www.efm.bris.ac.uk/economics/working_papers/pdffiles/dp05575.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Department of Economics, University of Bristol, UK in its series Bristol Economics Discussion Papers with number 05/575.

as in new window
Length: 46 pages
Date of creation: Jul 2005
Date of revision:
Handle: RePEc:bri:uobdis:05/575

Contact details of provider:
Postal: 8 Woodland Road, Bristol, BS8 1TN
Phone: 0117 928 8415
Fax: 0117 928 8577
Email:
Web page: http://www.efm.bris.ac.uk/
More information through EDIRC

Related research

Keywords: openness; trade; financial development.;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Dollar, David & Kraay, Aart, 2001. "Trade, growth, and poverty," Policy Research Working Paper Series, The World Bank 2615, The World Bank.
  2. Steve Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  3. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert W., 1998. "Law and Finance," Scholarly Articles 3451310, Harvard University Department of Economics.
  4. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, American Economic Association, vol. 82(4), pages 942-63, September.
  5. Peter Blair Henry, 2003. "Capital-Account Liberalization, the Cost of Capital, and Economic Growth," American Economic Review, American Economic Association, American Economic Association, vol. 93(2), pages 91-96, May.
  6. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers, Economics Group, Nuffield College, University of Oxford 104, Economics Group, Nuffield College, University of Oxford.
  7. Menzie D. Chinn & Hiro Ito, 2005. "What Matters for Financial Development? Capital Controls, Institutions, and Interactions," NBER Working Papers 11370, National Bureau of Economic Research, Inc.
  8. Demirguc-Kunt, Asli & Levine, Ross, 1999. "Bank-based and market-based financial systems - cross-country comparisons," Policy Research Working Paper Series, The World Bank 2143, The World Bank.
  9. Alessandria, George & Qian, Jun, 2005. "Endogenous financial intermediation and real effects of capital account liberalization," Journal of International Economics, Elsevier, Elsevier, vol. 67(1), pages 97-128, September.
  10. Ju, Jiandong & Wei, Shang-Jin, 2005. "Endowment Versus Finance: A Wooden Barrel Theory of International Trade," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5109, C.E.P.R. Discussion Papers.
  11. Levine, Ross & Loayza, Norman & Beck, Thorsten, 1999. "Financial intermediation and growth : Causality and causes," Policy Research Working Paper Series, The World Bank 2059, The World Bank.
  12. Bond, Stephen & Bowsher, Clive & Windmeijer, Frank, 2001. "Criterion-based inference for GMM in autoregressive panel data models," Economics Letters, Elsevier, Elsevier, vol. 73(3), pages 379-388, December.
  13. José Wynne, 2005. "Wealth as a Determinant of Comparative Advantage," American Economic Review, American Economic Association, American Economic Association, vol. 95(1), pages 226-254, March.
  14. Giavazzi, Francesco & Tabellini, Guido, 2005. "Economic and political liberalizations," Journal of Monetary Economics, Elsevier, Elsevier, vol. 52(7), pages 1297-1330, October.
  15. Johnson, Paul & Durlauf, Steven N & Temple, Johnathan R. W., 2004. "Growth Econometrics," Vassar College Department of Economics Working Paper Series, Vassar College Department of Economics 61, Vassar College Department of Economics.
  16. Joshua Aizenman & Ilan Noy, 2003. "Endogenous Financial Openness: Efficiency and Political Economy Considerations," NBER Working Papers 10144, National Bureau of Economic Research, Inc.
  17. Siong Hook Law & Panicos Demetriades, 2005. "Openness, Institutions and Financial Development," Discussion Papers in Economics, Department of Economics, University of Leicester 05/8, Department of Economics, University of Leicester.
  18. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2003. "Law, endowments, and finance," Journal of Financial Economics, Elsevier, Elsevier, vol. 70(2), pages 137-181, November.
  19. Kletzer, Kenneth & Bardhan, Pranab, 1986. "Credit Markets and Patterns of International Trade," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt1g36f3sd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  20. Marco Pagano & Paolo Volpin, 2001. "The Political Economy of Finance," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 76, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  21. Bowsher, Clive G., 2002. "On testing overidentifying restrictions in dynamic panel data models," Economics Letters, Elsevier, Elsevier, vol. 77(2), pages 211-220, October.
  22. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  23. Lant Pritchett & Michael Woolcock & Gwen Busby & Jonathan Isham, 2004. "The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth," Middlebury College Working Paper Series, Middlebury College, Department of Economics 0308r, Middlebury College, Department of Economics.
  24. Huybens, Elisabeth & Smith, Bruce D., 1999. "Inflation, financial markets and long-run real activity," Journal of Monetary Economics, Elsevier, Elsevier, vol. 43(2), pages 283-315, April.
  25. King, Robert G & Levine, Ross, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(3), pages 717-37, August.
  26. Marco Pagano & Paolo Volpin, 1999. "The Political Economy of Corporate Governance," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 29, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Jul 2005.
  27. Beck, Thorsten, 2001. "Financial development and international trade : is there a link?," Policy Research Working Paper Series, The World Bank 2608, The World Bank.
  28. Daniel Berkowitz & Katharina Pistor & Jean-Francois Richard, 2000. "Economic Development, Legality, and the Transplant Effect," CID Working Papers, Center for International Development at Harvard University 39, Center for International Development at Harvard University.
  29. Kan Li & Randall Morck & Fan Yang & Bernard Yeung, 2004. "Firm-Specific Variation and Openness in Emerging Markets," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 86(3), pages 658-669, August.
  30. Stephen Bond & Anke Hoeffler & Jonathan Temple, 2001. "GMM Estimation of Empirical Growth Models," Economics Papers, Economics Group, Nuffield College, University of Oxford 2001-W21, Economics Group, Nuffield College, University of Oxford.
  31. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, American Economic Association, vol. 89(3), pages 379-399, June.
  32. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 35(2), pages 688-726, June.
  33. Jiandong Ju & Shang-Jin Wei, 2005. "Endowment Versus Finance," IMF Working Papers, International Monetary Fund 05/123, International Monetary Fund.
  34. Levine, Ross & Zervos, Sara, 1998. "Stock Markets, Banks, and Economic Growth," American Economic Review, American Economic Association, American Economic Association, vol. 88(3), pages 537-58, June.
  35. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, Elsevier, vol. 69(1), pages 5-50, July.
  36. Beck, T.H.L., 2003. "Financial dependence and international trade," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-3125509, Tilburg University.
  37. Raghuram G. Rajan & Luigi Zingales, . "Financial Dependence and Growth," CRSP working papers, Center for Research in Security Prices, Graduate School of Business, University of Chicago 344, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  38. Svaleryd, Helena & Vlachos, Jonas, 1999. "Markets for Risk and Openness to Trade: How are they Related?," Working Paper Series in Economics and Finance, Stockholm School of Economics 327, Stockholm School of Economics, revised 10 Sep 2000.
  39. Joshua Aizenman, 2004. "Financial Opening and Development: Evidence and Policy Controversies," American Economic Review, American Economic Association, American Economic Association, vol. 94(2), pages 65-70, May.
  40. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, Elsevier, vol. 126(1), pages 25-51, May.
  41. Dell''Ariccia, Giovanni & Marquez, Robert, 2005. "Lending Booms and Lending Standards," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5095, C.E.P.R. Discussion Papers.
  42. Stulz, Rene M. & Williamson, Rohan, 2003. "Culture, openness, and finance," Journal of Financial Economics, Elsevier, Elsevier, vol. 70(3), pages 313-349, December.
  43. Holtz-Eakin, Douglas, 1988. "Testing for individual effects in autoregressive models," Journal of Econometrics, Elsevier, Elsevier, vol. 39(3), pages 297-307, November.
  44. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, Elsevier, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934 Elsevier.
  45. Stephen Bond & Frank Windmeijer, 2005. "Reliable Inference For Gmm Estimators? Finite Sample Properties Of Alternative Test Procedures In Linear Panel Data Models," Econometric Reviews, Taylor & Francis Journals, Taylor & Francis Journals, vol. 24(1), pages 1-37.
  46. repec:rus:hseeco:123720 is not listed on IDEAS
  47. Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2000. "A New Database on the Structure and Development of the Financial Sector," World Bank Economic Review, World Bank Group, World Bank Group, vol. 14(3), pages 597-605, September.
  48. Boyd, John H. & Levine, Ross & Smith, Bruce D., 2001. "The impact of inflation on financial sector performance," Journal of Monetary Economics, Elsevier, Elsevier, vol. 47(2), pages 221-248, April.
  49. Colin Mayer & Oren Sussman, 2001. "The Assessment: Finance, Law, and Growth," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 17(4), pages 457-466.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bri:uobdis:05/575. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jonathan Temple).

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.