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Financial system architecture and the patterns ofinternational trade

Amissah, Emmanuel and Bougheas, Spiro and Defever, Fabrice and Falvey, Rod (2016) Financial system architecture and the patterns ofinternational trade. CEP discussion paper, CEPDP1448. Centre for Economic Performance (CEP), London, UK.

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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: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/
Additional Information: © 2016 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HG Finance
JEL classification: F - International Economics > F1 - Trade > F10 - General
G - Financial Economics > G2 - Financial Institutions and Services > G20 - General
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Series: Working Papers > CEP Discussion Papers
Date Deposited: 26 Jan 2017 12:48
Last Modified: 26 Jan 2017 13:04
Projects: CEP Trade Programme
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/69016

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