Does external trade promote financial development?

Yongfu Huang and Jonathan Temple

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: Several recent papers have argued that trade and financial development may be linked, either for political economy reasons, or because foreign competition and exposure to shocks lead to changes in the demand for external finance. In this paper we use the cross-country and time-series variation in openness to study the relationship between trade and finance in more detail. Our results suggest that increases in goods market openness are typically followed by sustained increases in financial depth.

Keywords: openness; trade; financial development. (search for similar items in EconPapers)
JEL-codes: F13 O16 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2005-07
New Economics Papers: this item is included in nep-dev, nep-fmk and nep-int
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Citations: View citations in EconPapers (164)

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Working Paper: Does External Trade Promote Financial Development? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:05/575

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