 The Effects of Financial Development on Trade Openness: Evidence from Panel Threshold Regression ModelsZühal Kurul ()
Bulletin of Economic Theory and Analysis, 2021, vol. 6, issue 1, 53-68 Abstract: This paper attempts to re-examine the finance-trade nexus and tests whether higher levels of financial development can reduce trade openness. Using static and dynamic panel threshold regression techniques based on 64 countries over the period of 1970-2014, this study shows that financial development fosters trade openness until a certain level of threshold is achieved and beyond that threshold level, further increases in financial development lead to decline in trade openness. The results of this study suggest that there is a need for developing alternative and new trade financing channels to increase trade openness as well as it provides a strong empirical support for trade-limiting effects of financial development. Hence, this study is possibly encouraging for policy makers to redesign trade enhancing policies. Keywords: Financial Development; Trade Openness; Panel Threshold Regression Models (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ris:betajl:0056 Access Statistics for this article Bulletin of Economic Theory and Analysis is currently edited by Erginbay Ugurlu More articles in Bulletin of Economic Theory and Analysis from BETA Journals |
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