Financial Dependence and International Trade
City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER
May 1, 2000
World Bank Policy Research Working Paper No. 2609
Does financial development translate into a comparative advantage in industries that use more external finance? Yes, it does.
Using industry-level data on firms' dependence on external finance - data for 36 industries and 56 countries - Beck 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 attributable to reverse causality or simultaneity bias.
This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to understand the link between financial development and economic growth. The author may be contacted at firstname.lastname@example.org.
Number of Pages in PDF File: 33
Date posted: April 20, 2016
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