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Impacts of Regional Trade Agreements on the Trade Effects of Financial Development

Author

Listed:
  • Zhang Juan

    (Shanghai University of International Business and Economics, Gubei Road 620, Shanghai, China.)

  • Chen Jiahui

    (Shanghai University of International Business and Economics, Gubei Road 620, Shanghai, China.)

  • Liu Zuanshi

    (East China University of Science and Technology, Meilong Road 130, Shanghai, China.)

Abstract

Regional trade agreements (RTAs) significantly reduce tariff and non-tariff barriers, facilitate capital flow and improve financing conditions, which can help exporters ease financing constraints and promote export. This paper studies the impacts of RTAs signed by member countries of Regional Comprehensive Economic Partnership Agreement (RCEP) on the trade effects of financial development, using the gravity model with industry level bilateral trade data from 2000 to 2021. The results show that with RTAs, exporters’ dependence on financial development of home countries has decreased, and there is a similar mechanism in importing countries. However, exporters’ decreasing dependence on financial development is different, i.e., the decreasing dependence of exporters in industries rely heavily on external financing is smaller than that in other industries.

Suggested Citation

  • Zhang Juan & Chen Jiahui & Liu Zuanshi, 2024. "Impacts of Regional Trade Agreements on the Trade Effects of Financial Development," Zagreb International Review of Economics and Business, Sciendo, vol. 27(2), pages 353-373.
    • Handle: RePEc:vrs:zirebs:v:27:y:2024:i:2:p:353-373:n:1017
    DOI: 10.2478/zireb-2024-0031
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    References listed on IDEAS

    as
    1. Allee, Todd & Peinhardt, Clint, 2011. "Contingent Credibility: The Impact of Investment Treaty Violations on Foreign Direct Investment," International Organization, Cambridge University Press, vol. 65(3), pages 401-432, July.
    2. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
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    More about this item

    Keywords

    regional trade agreements (RTAs); financial development; trade; financial constraints;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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