Impacts of Regional Trade Agreements on the Trade Effects of Financial Development

Zhang Juan (), Chen Jiahui and Liu Zuanshi
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Zhang Juan: Shanghai University of International Business and Economics, Gubei Road 620, Shanghai, China.
Chen Jiahui: Shanghai University of International Business and Economics, Gubei Road 620, Shanghai, China.
Liu Zuanshi: East China University of Science and Technology, Meilong Road 130, Shanghai, China.

Zagreb International Review of Economics and Business, 2024, vol. 27, issue 2, 353-373

Abstract: Regional trade agreements (RTAs) significantly reduce tariff and non-tariff barriers, facilitate capital flow and improve financing conditions, which can help exporters ease financing constraints and promote export. This paper studies the impacts of RTAs signed by member countries of Regional Comprehensive Economic Partnership Agreement (RCEP) on the trade effects of financial development, using the gravity model with industry level bilateral trade data from 2000 to 2021. The results show that with RTAs, exporters’ dependence on financial development of home countries has decreased, and there is a similar mechanism in importing countries. However, exporters’ decreasing dependence on financial development is different, i.e., the decreasing dependence of exporters in industries rely heavily on external financing is smaller than that in other industries.

Keywords: regional trade agreements (RTAs); financial development; trade; financial constraints (search for similar items in EconPapers)
JEL-codes: F13 G32 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:zirebs:v:27:y:2024:i:2:p:353-373:n:1017

DOI: 10.2478/zireb-2024-0031

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