Financial Sector Competition, Service Trade, and Growth

Joseph Francois () and Felix Eschenbach ()
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Felix Eschenbach: Faculty of Economics, Erasmus University

No 02-089/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We explore dynamic linkages between financial/banking sector openness, financial sector competition, and growth. We first develop an analytical model, highlighting links between long-run economic performance and services trade, through scale economies and market and cost structures in the financial services sector. This is folIowed by an econometric exercise based on data for 130 countries for the 1990s. Our resu1ts point to a strong positive relationship between financia1 sector competition/performance and financia1 sector openness (meaning foreign bank access to domestic markets), and between growth and financial sector competition/performance. They also point to the presence of sca1e economies in the sector.

Keywords: financial services trade; financial sector openness; service trade and imperfect competition; trade in services and growth; banking and growth. (search for similar items in EconPapers)
JEL-codes: F40 F13 F43 G15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-com, nep-dev and nep-fin
Date: Written 2002-09-17
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Related works:
Working Paper: Financial Sector Competition, Services Trade, and Growth (2002)
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