Financial intermediation, trade agreements and international trade

Duc Bao Nguyen and A.-G. Vaubourg ()
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Duc Bao Nguyen: GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique
A.-G. Vaubourg: CRIEF [Poitiers] - Centre de recherche sur l'intégration économique et financière - UP - Université de Poitiers = University of Poitiers, Axe 2 (2017-2021) : "Vulnérabilités et risques" (MSHS Poitiers) - MSHS de Poitiers - Maison des sciences de l'homme et de la société de Poitiers - UP - Université de Poitiers = University of Poitiers - CNRS - Centre National de la Recherche Scientifique

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Abstract: Using a gravity model on a data set of 69 developed and developing countries over the period 1986–2006, we show that the trade-promoting role of financial intermediation in the exporting country is mitigated when this country faces low exporting costs, that is when there is a regional trade agreement (RTA) between this country and the importing one. We also establish that this mitigating effect is reduced in financially constrained sectors, for which the role of financial intermediation remains crucial. Finally, we find evidence that the same trade-boosting effect and the same interaction with RTAs prevail for financial intermediation in the importing country. © 2020 John Wiley & Sons Ltd

Keywords: Developing World; Economic History; Finance; International Trade; Regional Trade; Trade Agreement (search for similar items in EconPapers)
Date: 2021-03
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Published in The World Economy, 2021, 44 (3), pp.788-817. ⟨10.1111/twec.13010⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03435110

DOI: 10.1111/twec.13010

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