Financial system architecture and the patterns of international trade

Amissah, E. ORCID: 0000-0002-2665-2264, Bougheas, S., Falvey, R. and Defever, F., 2021. Financial system architecture and the patterns of international trade. European Economic Review, 136: 103751. ISSN 0014-2921

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Abstract

Countries differ in the extent to which their financial systems rely on banks or on financial markets. We offer a model featuring a complex relationship between countries’ financial system architecture and their comparative advantage. Countries with capital markets that are relatively more efficient than their banking systems gain comparative advantage in sectors with strong dependence on market finance. Moreover, countries specialising in sectors that depend on market finance develop their capital markets more than their banking systems. To empirically investigate these links, we construct a measure of sector bank dependence and establish a bi-directional relationship between countries’ comparative advantage and their financial systems architecture.

Item Type: Journal article
Publication Title: European Economic Review
Creators: Amissah, E., Bougheas, S., Falvey, R. and Defever, F.
Publisher: Elsevier
Date: July 2021
Volume: 136
ISSN: 0014-2921
Identifiers:
NumberType
10.1016/j.euroecorev.2021.103751DOI
1440346Other
Divisions: Schools > Nottingham Business School
Record created by: Laura Ward
Date Added: 21 May 2021 09:37
Last Modified: 18 Oct 2021 08:39
URI: http://irep.ntu.ac.uk/id/eprint/42901

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