DP2144 Trade in Financial Services: Procompetitive Effects and Growth Performance
|Author(s):||Joseph Francois, Ludger Schuknecht|
|Publication Date:||May 1999|
|Keyword(s):||Financial Services Trade, Service Trade and Imperfect Competition, Trade in Services and Growth|
|JEL(s):||F13, F40, F43|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=2144|
In this paper we explore linkages between financial services trade and growth. We offer a formalization of the argument that trade, through the fostering of financial market integration, may yield important long-run effects related to increased competition. The relationships formalized here link long-run economic performance to scale economies and cost structures in the financial services sector, and to market concentration in the sector. We first develop an analytical model. This motivates an econometric exercise. Cross-country growth regressions point to a strong positive relationship between financial sector competition and financial sector openness, and between growth and financial sector competition.