Financial system architecture and the patterns of international trade

Amissah, E. ORCID: 0000-0002-2665-2264, Bougheas, S., Defever, F. and Falvey, R., 2016. Financial system architecture and the patterns of international trade. Munich, Germany: Center for Economic Studies and Ifo Institute.

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Abstract

Countries differ on the extent to which their financial system relies on banks or on the financial market. We offer a model featuring a possible two way relationship between countries’ financial system architecture and their comparative advantage. Countries specialising in bank dependent sectors favour the development of the banking sector. Simultaneously, countries with more efficient capital markets develop comparative advantage in sectors with strong dependence on market finance. To empirically investigate our model’s predictions, we construct a measure of sector bank dependence and establish a strong relationship between countries’ comparative advantage and their financial system architecture.

Item Type: Working paper
Description: CESifo working paper no. 5960. Category 8: trade policy
Creators: Amissah, E., Bougheas, S., Defever, F. and Falvey, R.
Publisher: Center for Economic Studies and Ifo Institute
Place of Publication: Munich, Germany
Date: June 2016
ISSN: 2364-1428
Depositing User: Jonathan Gallacher
Date Added: 01 Mar 2017 11:34
Last Modified: 09 Jun 2017 14:13
URI: http://irep.ntu.ac.uk/id/eprint/30291

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