اثرات پویای درجه باز بودن تجاری بر توسعه مالی

This paper employs the Pooled Mean Group (PMG) approach of Pesaran et al. (1999) to study the dynamic effects of trade openness on financial development. The advantage of the PMG estimator over other dynamic panel econometric techniques is that it allows short-run coefficients, speeds of adjustment and error variances to vary across countries, with cross-country homogeneity restrictions only on long-run parameters. Our results spanning 88 countries over 1960–2005 show that a positive long-run relationship between trade openness and financial development coexists with a negative short-run relationship. But when splitting the data into different income or inflation groups, this finding is observed only in relatively low-income countries or high-inflation economies.

Beginning with the cross-country analysis of King and Levine, 1993a and King and Levine, 1993b, most empirical investigations find a strong and robust positive link between financial development and economic growth. Financial intermediaries and markets may provide information about profitable ventures, diversify risks, and facilitate resource mobilization. Then, a well-developed financial system helps improve capital formation and the efficiency of resource allocation, promoting thereby long-run economic growth.1 In addition to improving growth, financial development may alleviate poverty and hence reduces inequality. If capital market imperfection and indivisibility of investment in human or physical capital lead to income divergence between the rich and the poor, then financial development may reduce poverty and income inequality by disproportionately relaxing credit constraints on the poor.2

Given its importance in determining both economic growth and income inequality, a growing body of research has examined the direct law, regulations, and macroeconomic policies shaping financial sector operations. Several recent papers suggest that trade openness helps shape financial sector operations. However, the exact effect of trade on financial development is unclear yet. The ambiguity may arise from the dual role of trade openness; trade openness tends to strengthen long-run financial development in the presence of international competition, and increases exposure to risk and leads to more frequent crises which are more short-run phenomenon. Therefore, distinguishing the long-run effects from the short-run dynamics is of particular relevance in understanding the role of trade in shaping financial development.