Financial Sector Competition, Services Trade, and Growth
Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)
Joseph F. Francois
Johannes Kepler University Linz; Centre for Economic Policy Research (CEPR); Vienna Institute of International Economic Studies (WIIW); University of Adelaide - School of Economics
CEPR Discussion Paper No. 3573
We explore dynamic linkages between financial/banking sector openness, financial sector competition, and growth. We first develop an analytical model, highlighting links between long-run economic performance and the services trade, through scale economies and market and cost structures in the financial services sector. This is followed by an econometric exercise based on data for 130 countries for the 1990s. Our results point to a strong positive relationship between financial sector competition/performance and financial sector openness (meaning foreign bank access to domestic markets), and between growth and financial sector competition/performance. They also point to the presence of scale economies in the sector.
Number of Pages in PDF File: 24
Keywords: Financial services trade, financial sector openness, services trade, services trade and growth, services trade and imperfect competition, banking competition
JEL Classification: F13, F40, F43, G15working papers series
Date posted: November 13, 2002
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