Publication:
Trade and Financial Development

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dc.contributor.authorDo, Quy-Toan
dc.contributor.authorLevchenko, Andrei A.
dc.date.accessioned2013-06-20T16:51:55Z
dc.date.available2013-06-20T16:51:55Z
dc.date.issued2004-04
dc.description.abstractThe differences in financial development between advanced and developing countries are pronounced. It has been observed, both theoretically and empirically, that these differences in countries' financial systems are a source of comparative advantage and trade. This paper points out that to the extent a country's financial development is endogenous, it will in turn be influenced by trade. The paper builds a model in which a country's financial development is an equilibrium outcome of the economy's productive structure: in countries with large financially intensive sectors financial systems are more developed. When a wealthy and a poor country open to trade, the financially dependent sectors grow in the wealthy country, and so does the financial system. By contrast, as the financially intensive sectors shrink in the poor country, demand for external finance decreases and the domestic financial system deteriorates. This paper describes the authors' test model using data on financial development for a sample of 77 countries. The authors find that the main predictions of the model are borne out in the data: trade openness is associated with faster financial development in wealthier countries, and with slower financial development in poorer ones.en
dc.identifierhttp://documents.worldbank.org/curated/en/2004/06/4964018/trade-financial-development
dc.identifier.doi10.1596/1813-9450-3347
dc.identifier.urihttps://hdl.handle.net/10986/14062
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, D.C.
dc.relation.ispartofseriesPolicy, Research working paper;no. WPS 3347
dc.relation.ispartofseriesPolicy Research Working Paper;No.3347
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectTRADE
dc.subjectINTERNATIONAL TRADE
dc.subjectFINANCIAL DEVELOPMENT
dc.subjectENDOGENOUS DEVELOPMENT
dc.subjectNEW INTERNATIONAL ECONOMIC ORDER
dc.subjectFINANCIAL SYSTEMS
dc.subjectFINANCIAL INFRASTRUCTURE
dc.subjectORGANIZATION FOR ECONOMIC COOPERATION & DEVELOPMENT
dc.subjectENTREPRENEURS
dc.subjectBUSINESS ENTERPRISES AGGREGATE OUTPUT
dc.subjectAGGREGATE SUPPLY
dc.subjectAGGREGATE TRADE
dc.subjectARBITRAGE
dc.subjectCLOSED ECONOMY
dc.subjectCOMPARATIVE ADVANTAGE
dc.subjectCOUNTRY CHARACTERISTICS
dc.subjectCOUNTRY DUMMIES
dc.subjectCREDIT MARKET
dc.subjectDATA SET
dc.subjectDEBT
dc.subjectDEVELOPED COUNTRIES
dc.subjectDEVELOPING COUNTRIES
dc.subjectDIFFERENTIAL IMPACT
dc.subjectECONOMIC CONDITIONS
dc.subjectEMERGING MARKETS
dc.subjectEMPIRICAL EVIDENCE
dc.subjectEMPIRICAL SUPPORT
dc.subjectEMPIRICAL WORK
dc.subjectEQUILIBRIUM
dc.subjectEQUILIBRIUM VALUE
dc.subjectEXPORTS
dc.subjectEXTERNAL FINANCE
dc.subjectEXTERNAL FINANCING
dc.subjectEXTERNALITIES
dc.subjectEXTERNALITY
dc.subjectFINAL GOODS
dc.subjectFINANCIAL DEPTH
dc.subjectFINANCIAL DEVELOPMENT
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL SECTOR
dc.subjectFINANCIAL SYSTEM
dc.subjectFINANCIAL SYSTEMS
dc.subjectGDP
dc.subjectGRAVITY MODEL
dc.subjectHUMAN CAPITAL
dc.subjectIMPACT OF TRADE
dc.subjectIMPORTS
dc.subjectINCOME
dc.subjectINCOME DISTRIBUTION
dc.subjectINCOME VARIABILITY
dc.subjectINCREASING GROWTH
dc.subjectINCREASING RETURNS
dc.subjectINCREASING RETURNS TO SCALE
dc.subjectINSURANCE
dc.subjectINTEREST RATE
dc.subjectINTEREST RATES
dc.subjectINTERMEDIATE GOODS
dc.subjectINTERNATIONAL TRADE
dc.subjectINVESTOR PROTECTION
dc.subjectLEGAL SYSTEM
dc.subjectLIQUID LIABILITIES
dc.subjectLIQUIDITY
dc.subjectLONG-RUN GROWTH
dc.subjectM2
dc.subjectMARKET CAPITALIZATION
dc.subjectMARKET SIZE
dc.subjectMEASURE OF TRADE
dc.subjectNEGATIVE EFFECT
dc.subjectNON-OECD COUNTRIES
dc.subjectOPPORTUNITY COST
dc.subjectOUTPUT VOLATILITY
dc.subjectPER CAPITA INCOME
dc.subjectPER CAPITA INCOMES
dc.subjectPOOR COUNTRIES
dc.subjectPOOR COUNTRY
dc.subjectPOSITIVE EFFECT
dc.subjectPOSITIVE EXTERNALITY
dc.subjectPRODUCTION FUNCTION
dc.subjectPRODUCTIVITY
dc.subjectPROFIT MAXIMIZATION
dc.subjectPROPERTY RIGHTS
dc.subjectREAL OUTPUT
dc.subjectRESEARCH AGENDA
dc.subjectSIGNIFICANCE LEVEL
dc.subjectSIGNIFICANT DIFFERENCES
dc.subjectSPECIALIZATION
dc.subjectTOTAL OUTPUT
dc.subjectTRADE OPENING
dc.subjectTRADE OPENNESS
dc.subjectTRADE PATTERNS
dc.subjectUNIT OF LABOR
dc.subjectWEALTH
dc.titleTrade and Financial Developmenten
dspace.entity.typePublication
okr.crosscuttingsolutionareaJobs
okr.crossref.titleTrade and Financial Development
okr.date.doiregistration2025-04-10T10:49:00.495930Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2004/06/4964018/trade-financial-development
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeSocial Protection and Labor
okr.globalpracticePoverty
okr.globalpracticeTrade and Competitiveness
okr.guid394581468779413283
okr.identifier.doi10.1596/1813-9450-3347
okr.identifier.externaldocumentum000009486_20040722164842
okr.identifier.internaldocumentum4964018
okr.identifier.reportWPS3347
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/07/22/000009486_20040722164842/Rendered/PDF/wps3347.pdfen
okr.topicFiscal and Monetary Policy
okr.topicSocial Protections and Labor::Labor Policies
okr.topicPoverty Reduction::Inequality
okr.topicInternational Economics and Trade::Free Trade
okr.topicPayment Systems and Infrastructure
okr.topicEconomic Theory and Research
okr.topicMacroeconomics and Economic Growth::Macroeconomic Management
okr.topicEnvironmental Economics and Policies
okr.unitOff of Sr VP Dev Econ/Chief Econ (DECVP)
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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