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Financial Sector Competition, Services Trade, and Growth

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Author Info
Eschenbach, Felix
Francois, Joseph

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Abstract

We explore dynamic linkages between financial/banking sector openness, financial sector competition, and growth. We first develop an analytical model, highlighting links between long-run economic performance and the services trade, through scale economies and market and cost structures in the financial services sector. This is followed by an econometric exercise based on data for 130 countries for the 1990s. Our results point to a strong positive relationship between financial sector competition/performance and financial sector openness (meaning foreign bank access to domestic markets), and between growth and financial sector competition/performance. They also point to the presence of scale economies in the sector.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3573.

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Date of creation: Oct 2002
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Handle: RePEc:cpr:ceprdp:3573

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Related research
Keywords: banking competition financial sector openness financial services trade services trade services trade and growth services trade and imperfect competition

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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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.:
  1. Williamson, Stephen D, 1987. "Financial Intermediation, Business Failures, and Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1196-1216, December. [Downloadable!] (restricted)
  2. Diamond, Douglas W, 1991. "Monitoring and Reputation: The Choice between Bank Loans and Directly Placed Debt," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 689-721, August. [Downloadable!] (restricted)
  3. Claessens, Stijn & Demirguc-Kunt, Asli & Huizinga, Harry, 1998. "How does foreign entry affect the domestic banking market?," Policy Research Working Paper Series 1918, The World Bank. [Downloadable!]
  4. Hali J. Edison & Michael Klein & Luca Antonio Ricci & Torsten Sløk, 2002. "Capital Account Liberalization and Economic Performance: Survey and Synthesis," IMF Working Papers 02/120, International Monetary Fund. [Downloadable!]
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  5. Williamson, Stephen D, 1987. "Costly Monitoring, Loan Contracts, and Equilibrium Credit Rationing," The Quarterly Journal of Economics, MIT Press, vol. 102(1), pages 135-45, February. [Downloadable!] (restricted)
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  6. Leland, Hayne E & Pyle, David H, 1977. "Informational Asymmetries, Financial Structure, and Financial Intermediation," Journal of Finance, American Finance Association, vol. 32(2), pages 371-87, May. [Downloadable!] (restricted)
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  7. De Gregorio, Jose & Guidotti, Pablo E., 1995. "Financial development and economic growth," World Development, Elsevier, vol. 23(3), pages 433-448, March. [Downloadable!] (restricted)
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  8. Benhabib, Jess & Spiegel, Mark M, 2000. " The Role of Financial Development in Growth and Investment," Journal of Economic Growth, Springer, vol. 5(4), pages 341-60, December. [Downloadable!] (restricted)
  9. Roubini, Nouriel & Sala-i-Martin, Xavier, 1992. "Financial repression and economic growth," Journal of Development Economics, Elsevier, vol. 39(1), pages 5-30, July. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Bruno S. Frey, 2005. "Zwei Utopien jenseits des Weltstaates und der Anarchie," IEW - Working Papers iewwp258, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  2. Bayraktar, Nihal & Wang, Yan, 2006. "Banking sector openness and economic growth," Policy Research Working Paper Series 4019, The World Bank. [Downloadable!]
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