The E ffects 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 pure 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.
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Bibliographic InfoPaper provided by CERDI in its series Working Papers with number 201235.
Date of creation: 2012
Date of revision:
Financial Development; Manufacturing Exports; Comparative Advantages; Institutional Quality;
Other versions of this item:
- Youssouf Kiendrebeogo, 2012. "The effects of financial development on trade performance and the role of institutions," Economics Bulletin, AccessEcon, vol. 32(3), pages 2546-2559.
- Youssouf KIENDREBEOGO, 2012. "The Effects of Financial Development on Trade Performance and the Role of Institutions," Working Papers halshs-00748544, HAL.
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- F10 - International Economics - - Trade - - - General
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (All new papers)
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