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

Resiandini, Pramesti (2010): Financial development and trade: evidence from the world's three largest economies.

Abstract

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Financial development; International trade flows; Gravity model
• Subjects: F - International Economics > F1 - Trade > F15 - Economic Integration; G - Financial Economics > G1 - General Financial Markets; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade

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