International Trade in Financial Services, Competition, and Growth Performance

CIES Working Paper No. 6

35 Pages Posted: 3 Aug 2000

See all articles by Joseph F. Francois

Joseph F. Francois

University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR); Vienna Institute of International Economic Studies (WIIW); University of Adelaide - School of Economics

Ludger Schuknecht

European Central Bank (ECB)

Date Written: February 2000

Abstract

In this paper we explore linkages between financial services trade and growth. We offer a formalization of the argument that trade, through the fostering of financial market integration, may yield important long-run effects related to increased competition. The relationships formalized here link long-run economic performance to scale economies and cost structures in the financial services sector, and to market concentration in the sector. We first develop an analytical model. This motivates an econometric exercise. Cross-country growth regressions point to a strong positive relationship between financial sector competition and financial sector openness, and between growth and financial sector competition.

Keywords: Financial Services Trade, Service Trade And Imperfect Competition, Trade In Services And Growth

JEL Classification: F40, F13, F43

Suggested Citation

Francois, Joseph F and Schuknecht, Ludger, International Trade in Financial Services, Competition, and Growth Performance (February 2000). CIES Working Paper No. 6. Available at SSRN: https://ssrn.com/abstract=231235 or http://dx.doi.org/10.2139/ssrn.231235

Joseph F Francois

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, CH-3001
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Vienna Institute of International Economic Studies (WIIW) ( email )

Oppolzergasse 6
A-1010 Vienna
Austria

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 5540 (Phone)
+61 8 8223 1460 (Fax)

Ludger Schuknecht (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344 6494 (Phone)
+49 69 1344 7809 (Fax)

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