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.

financial services trade, service trade and imperfect competition, trade in services and growth
Commercial Policy; Protection; Promotion; Trade Negotiations; International Organizations (jel F13), Macroeconomic Aspects of International Trade and Finance: General (jel F40), Economic Growth of Open Economies (jel F43)
Tinbergen Institute Discussion Paper Series
Tinbergen Institute

François, J.F, & Schuknecht, L. (1999). Trade in Financial Services: Procompetitive Effects and Growth Performance (No. TI 99-028/2). Tinbergen Institute Discussion Paper Series. Retrieved from