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Trade in Financial Services: Procompetitive Effects and Growth Performance

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  • Joseph F. Francois

    ()
    (Erasmus University Rotterdam)

  • Lutger Schuknecht

    (World Trade Organisation)

Abstract

In this paper we explore linkages between financial services tradeand growth. We offer aformalization of the argument that trade, through the fostering offinancial market integration,may yield important long-run effects related to increasedcompetition. The relationshipsformalized here link long-run economic performance to scale economiesand cost structures inthe financial services sector, and to market concentration in thesector. We first develop ananalytical model. This motivates an econometric exercise. Cross-country growth regressionspoint to a strong positive relationship between financial sectorcompetition and financial sectoropenness, and between growth and financial sector competition.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 99-028/2.

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Date of creation: 14 Apr 1999
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Handle: RePEc:dgr:uvatin:19990028

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Web page: http://www.tinbergen.nl

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Keywords: financial services trade; service trade and imperfect competition; trade in services and growth;

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References

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  8. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, Elsevier, vol. 32(3), pages 513-542, December.
  9. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
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Citations

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Cited by:
  1. Gary Clyde Hufbauer & Erika Wada, 1999. "Hazards and Precautions: Tales of International Finance," Working Paper Series, Peterson Institute for International Economics WP99-11, Peterson Institute for International Economics.
  2. Francois, Joseph & Wooton, Ian, 2001. "Market structure, trade liberalization and the GATS," European Journal of Political Economy, Elsevier, vol. 17(2), pages 389-402, June.
  3. Nacer Bernou & Mustapha Sadni Jallab, 2002. "Le commerce des services financiers dans le monde : un état des lieux," Post-Print halshs-00178172, HAL.
  4. Mattoo, Aaditya & Rathindran, Randeep & Subramanian, Arvind, 2001. "Measuring services trade liberalization and its impact on economic growth : an illustration," Policy Research Working Paper Series 2655, The World Bank.
  5. Lee-Rong Wang & Chung-Hua Shen & Ching-Yang Liang, 2008. "Financial Liberalization under the WTO and Its Relationship with the Macro Economy," NBER Chapters, in: International Financial Issues in the Pacific Rim: Global Imbalances, Financial Liberalization, and Exchange Rate Policy (NBER-EASE Volume 17), pages 315-345 National Bureau of Economic Research, Inc.
  6. Harms, Philipp & Mattoo, Aaditya & Schuknecht, Ludger, 2003. "Explaining liberalization commitments in financial services trade," Policy Research Working Paper Series 2999, The World Bank.
  7. Hui Huang & John Whalley & Shunming Zhang, 2005. "Trade Liberalization in a Joint Spatial Inter-Temporal Trade Model," CESifo Working Paper Series 1463, CESifo Group Munich.
  8. Hui Huang & John Whalley & Shunming Zhang, 2009. "Exploring policy options in joint intertemporal-spatial trade models using an incomplete markets approach," Economic Theory, Springer, Springer, vol. 41(1), pages 131-145, October.

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