Financial Dependence and International Trade

Financial Dependence and International Trade

Does financial development translate into a comparative advantage in industries that use more external finance? The author uses industry-level data on firms' dependence on external finance for 36 industries and 56 countries to examine this question. The author shows that countries with better-developed financial systems have higher export shares and trade balances in industries that use more external finance. These results are robust to the use of alternative measures of external dependence and financial development and are not due to reverse causality or simultaneity bias.

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Bibliographic Details
Main Author: Beck, Thorsten
Language:English
en_US
Published: World Bank, Washington, DC 2001-05
Subjects:ACCOUNTING, ADVERSE SELECTION, ALTERNATIVE INSTRUMENTS, BALANCE SHEETS, BEARING LIABILITIES, CAPITAL EXPENDITURES, CAPITAL MARKET, CAPITAL MARKETS, CASH FLOWS, CENTRAL BANK, COAL, COMMERCIAL BANKS, COMPARATIVE ADVANTAGE, CONSUMERS, CONTRACT ENFORCEMENT, CREDIT MARKET, CREDIT RATIONING, CREDITOR RIGHTS, CURRENCY, DEMAND SHOCKS, DEVELOPMENT ECONOMICS, DISCOUNTED VALUE, DOMESTIC INDUSTRIES, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMISTS, ELASTICITIES, ELASTICITY, ELASTICITY OF SUPPLY, ENTREPRENEURSHIP, EQUILIBRIUM, EQUITY MARKET, EXCHANGE RATE, EXCHANGE RATE POLICY, EXPENDITURES, EXPORT INDUSTRIES, EXPORT SHARE, EXPORT SHARES, EXPORTS, EXTERNAL FINANCE, EXTERNAL FINANCING, FACTOR ENDOWMENTS, FINANCIAL DEPENDENCE, FINANCIAL DEVELOPMENT, FINANCIAL DEVELOPMENT ACROSS COUNTRIES, FINANCIAL INSTITUTIONS, FINANCIAL INTERMEDIARIES, FINANCIAL INTERMEDIARY DEVELOPMENT, FINANCIAL MARKETS, FINANCIAL SECTOR, FINANCIAL SECTOR DEVELOPMENT, FINANCIAL STRUCTURE, FINANCIAL SYSTEM, FINANCIAL SYSTEMS, GDP, GDP PER CAPITA, HUMAN CAPITAL, IMPORT TARIFFS, IMPORTS, INCOME STATEMENTS, INDUSTRY TRADE, INSURANCE, INTERNATIONAL TRADE, LABOR PRODUCTIVITY, LESS DEVELOPED COUNTRIES, LIQUID LIABILITIES, LIQUIDITY, MARGINAL COSTS, MARKET CAPITALIZATION, MARKET DEVELOPMENT, MARKET IMPERFECTIONS, MARKET POWER, MONETARY ECONOMICS, MONOPOLIES, MORAL HAZARD, NET EXPORTERS, PER CAPITA INCOME, POLICY MAKERS, PRIVATE CREDIT, PRIVATE FIRMS, PRIVATE SECTOR, PRODUCERS, REAL GDP, REAL SECTOR, REGRESSION ANALYSIS, RETURN ON CAPITAL, SAVINGS, SPECIALIZATION, STOCK MARKET, STOCK MARKETS, SUPPLY CURVE, TARIFF BARRIERS, TRADE BALANCE, TRADE DATA, TRADE DEFICIT, TRADE FLOWS, TRADE MODELS, TRADE PATTERNS, TRADE POLICY, TRADE REFORMS, TRADE STRUCTURE,
Online Access:http://documents.worldbank.org/curated/en/2001/05/2873608/financial-dependence-international-trade
https://hdl.handle.net/10986/19634
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Summary:Does financial development translate into a comparative advantage in industries that use more external finance? The author uses industry-level data on firms' dependence on external finance for 36 industries and 56 countries to examine this question. The author shows that countries with better-developed financial systems have higher export shares and trade balances in industries that use more external finance. These results are robust to the use of alternative measures of external dependence and financial development and are not due to reverse causality or simultaneity bias.

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