THRESHOLD EFFECTS OF TRADE OPENNESS ON FINANCIAL DEVELOPMENT: THE CASE OF THE ASEAN REGION

Hyun-Jung Nam (), Mehmet Bilgin and Doojin Ryu
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Hyun-Jung Nam: Division of Shipping Management, National Korea Maritime & Ocean University, 27 Taejong-ro, Yeongdo-gu, Busan, Korea
Doojin Ryu: Department of Economics, Sungkyunkwan University, 25-2 Sungkyunkwan-ro, Jongno-gu, Seoul 03063, Korea

The Singapore Economic Review (SER), 2025, vol. 70, issue 01, 125-155

Abstract: This study examines the effect of trade openness on financial development in eight representative ASEAN countries, including Singapore. Low levels of exports and imports positively influence the depth, accessibility, and efficiency of financial development. Beyond a certain threshold, the benefits of trade openness for financial development begin to diminish. This threshold is lower than the mean value of trade openness, indicating that the ASEAN market possesses high trade flows but its financial sector remains of low quality. In the ASEAN region, the current financial development index is suboptimal compared to trade openness. Prioritizing improvements in financial development quality is thus crucial for mitigating the potential risks associated with excessive trade openness.

Keywords: ASEAN; export; financial development; import; trade openness (search for similar items in EconPapers)
JEL-codes: B27 F14 F18 F31 F41 G01 G15 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S0217590824500486

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