Comparative advantage, demand for external finance, and financial development

• 成果类型: Article
• 署名作者: Do, Quy-Toan; Levchenko, Andrei A.
• 署名单位: International Monetary Fund; The World Bank
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2006.11.004
• 发表日期: 2007
• 页码: 796-834
• 关键词: Trade patterns; demand for external finance; financial development; gravity model

摘要

This paper analyzes the effect of comparative advantage in international trade on a country's level of financial development. Countries with comparative advantage in financially intensive goods experience a higher demand for external finance, and therefore financial development. By contrast, financial development is lower in countries that primarily export goods which do not rely on external finance. We use disaggregated trade data to develop a measure of a country's external finance need of exports, and demonstrate this effect empirically. In order to overcome the simultaneity problem, we develop a novel instrumentation strategy based on the exogenous geographic determinants of trade patterns. (c) 2007 Elsevier B.V. All rights reserved.