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Financial development and trade: evidence from the world's three largest economies

  • Resiandini, Pramesti

This paper examines the relationship between financial development and trade based on panel data of bilateral trade between the world's three largest economies (United States, Japan, and Germany) and 47 partner countries over the period 2003 to 2007. Access to loans for businesses has a strong positive relationship with bilateral trade. Access to the local equity market raises trade with less developed countries, but lowers trade with developed countries. The study also finds that international financial indicators are significant determinants of trade.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25631.

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Date of creation: 03 Oct 2010
Date of revision:
Handle: RePEc:pra:mprapa:25631
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  1. Jeffrey A. Frankel & Eduardo A. Cavallo, 2004. "Does Openness to Trade Make Countries More Vulnerable to Sudden Stops, Or Less? Using Gravity to Establish Causality," NBER Working Papers 10957, National Bureau of Economic Research, Inc.
  2. Neary, J Peter, 2002. "Foreign Direct Investment and the Single Market," Manchester School, University of Manchester, vol. 70(3), pages 291-314, June.
  3. Freund, Caroline & Pierola, Martha Denisse, 2008. "Export surges : the oower of a competitive currency," Policy Research Working Paper Series 4750, The World Bank.
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  9. Levine, Ross & Zervos, Sara, 1996. "Stock markets, banks, and economic growth," Policy Research Working Paper Series 1690, The World Bank.
  10. J. Peter Neary, 1995. "Factor Mobility and International Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 28(s1), pages 4-23, November.
  11. Ross Levine, 1990. "Financial structure and economic development," International Finance Discussion Papers 381, Board of Governors of the Federal Reserve System (U.S.).
  12. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
  13. Markusen, James R., 1983. "Factor movements and commodity trade as complements," Journal of International Economics, Elsevier, vol. 14(3-4), pages 341-356, May.
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  15. Neary, J Peter, 2006. "Trade Costs and Foreign Direct Investment," CEPR Discussion Papers 5933, C.E.P.R. Discussion Papers.
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  17. Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Scholarly Articles 3445092, Harvard University Department of Economics.
  18. Helpman, Elhanan, 1987. "Imperfect competition and international trade: Evidence from fourteen industrial countries," Journal of the Japanese and International Economies, Elsevier, vol. 1(1), pages 62-81, March.
  19. Marianne Baxter & Michael A. Kouparitsas, 2006. "What Determines Bilateral Trade Flows?," NBER Working Papers 12188, National Bureau of Economic Research, Inc.
  20. Itay Goldstein & Assaf Razin, 2005. "Foreign Direct Investment vs. Foreiegn Portfolio Investment," NBER Working Papers 11047, National Bureau of Economic Research, Inc.
  21. Paulo Gala, 2008. "Real exchange rate levels and economic development: theoretical analysis and econometric evidence," Cambridge Journal of Economics, Oxford University Press, vol. 32(2), pages 273-288, March.
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