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

Pramesti Resiandini ()

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Financial development; International trade flows; Gravity model (search for similar items in EconPapers)
JEL-codes: F14 F15 G1 (search for similar items in EconPapers)
Date: 2010-10-03
New Economics Papers: this item is included in nep-ifn and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:25631

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