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Discussion Paper Details

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Title: Does External Trade Promote Financial Development?

Author(s): Yongfu Huang and Jonathan Temple

Publication Date: July 2005

Keyword(s): financial development, openness and trade

Programme Area(s): Institutions and Economic Performance

Abstract: Several recent papers have argued that trade and financial development may be linked, either for political economy reasons, or because foreign competition and exposure to shocks lead to changes in the demand for external finance. In this paper we use the cross-country and time-series variation in openness to study the relationship between trade and finance in more detail. Our results suggest that increases in goods market openness are typically followed by sustained increases in financial depth.

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Bibliographic Reference

Huang, Y and Temple, J. 2005. 'Does External Trade Promote Financial Development?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5150