The finance–trade nexus revisited: Is the global trade slowdown also a financial story?

Martin Gächter and Ioannis Gkrintzalis

Economics Letters, 2017, vol. 158, issue C, 21-25

Abstract: This paper studies the role of non-linearities in the finance–trade nexus. While we confirm the positive impact of financial development on the level of trade openness, our findings reveal that the marginal effect decreases considerably with the size of the financial sector. The study contributes to two different strands of the economic literature: First, while widely examined in the finance–growth nexus literature, the discovered non-linearities have been neglected so far in studies on the link between finance and trade. Second, the diminishing marginal effect of finance appears to be an important factor in explaining the recent slowdown in global trade growth.

Keywords: Finance; Financial development; Trade; Finance–trade nexus; Non-linearities (search for similar items in EconPapers)
JEL-codes: E44 F14 G10 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176517302239
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:158:y:2017:i:c:p:21-25

DOI: 10.1016/j.econlet.2017.05.037

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().