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Financial Sector Competition, Services Trade, and Growth

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  • Francois, Joseph
  • ,

Abstract

We explore dynamic linkages between financial/banking sector openness, financial sector competition, and growth. We first develop an analytical model, highlighting links between long-run economic performance and the services trade, through scale economies and market and cost structures in the financial services sector. This is followed by an econometric exercise based on data for 130 countries for the 1990s. Our results point to a strong positive relationship between financial sector competition/performance and financial sector openness (meaning foreign bank access to domestic markets), and between growth and financial sector competition/performance. They also point to the presence of scale economies in the sector.

Suggested Citation

  • Francois, Joseph & ,, 2002. "Financial Sector Competition, Services Trade, and Growth," CEPR Discussion Papers 3573, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3573
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    Cited by:

    1. Joseph Francois & Bernard Hoekman, 2010. "Services Trade and Policy," Journal of Economic Literature, American Economic Association, vol. 48(3), pages 642-692, September.
    2. Loayza,Norman V. & Ouazad,Amine & Ranciere,Romain, 2017. "Financial development, growth, and crisis: is there a trade-off ?," Policy Research Working Paper Series 8237, The World Bank.
    3. Bruno S. Frey, 2005. "Zwei Utopien jenseits des Weltstaates und der Anarchie," IEW - Working Papers 258, Institute for Empirical Research in Economics - University of Zurich.
    4. Gács, János, 2007. "A gazdasági globalizáció számokban. A nyitottság alakulása az EU országaiban - II. rész [Economic globalization in figures. The development of openness in the EU countries, II]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 960-973.
    5. Łukasz Matuszczak, 2019. "What are the determinants of international trade in services? Evidence from firm-level data for Poland," Working Papers 2019-20, Faculty of Economic Sciences, University of Warsaw.
    6. Bayraktar, Nihal & Wang, Yan, 2006. "Banking sector openness and economic growth," Policy Research Working Paper Series 4019, The World Bank.
    7. Lücke, Matthias & Spinanger, Dean, 2004. "Liberalisierung des internationalen Handels mit Dienstleistungen: Herausforderungen und Chancen für Entwicklungsländer," Kiel Working Papers 1228, Kiel Institute for the World Economy (IfW Kiel).
    8. Lücke, Matthias & Spinanger, Dean, 2004. "Liberalizing international trade in services: Challenges and opportunities for developing countries," Kiel Discussion Papers 412, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    Financial services trade; Financial sector openness; Services trade; Services trade and growth; Services trade and imperfect competition; Banking competition;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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