Hubungan antara perdagangan terbuka dan pengembangan sector keuangan di negara-negara Asia Timur dan Asia Selatan
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Date
2020Author
Maulida, Cut Rezki
Irawan, Tony
Barreto, Raul
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Trading activities play an important role in expanding economic growth.
The government can either isolate trading or open trading to other countries. It is
possible for a country to be open to trade without financial development. Trade
openness and financial development are linked; one part cannot be sustained
without the other part. There is a debate regarding the link between these two
sectors are stronger in middle income countries or high-income countries. Some
studies believe the relationship between these two sectors seem stronger in
developed countries while some in developing countries. The link between these
two sectors are still inconclusive, thus this research regarding this issue need to be
taken in East Asian and South Asian countries.
In this study, we analyse data set from 12 countries over the period of 2000
to 2016. The data for financial development is collected by Beck, Demirgüç-Kunt,
Čihák, Feyen, and Levine (2018) in Financial Structure Database. Three bankbased
financial development measurements are used: liquid liabilities (llgdp), bank
assets (dbagdp) and private credit (pcrdbofgdp). Liquid liabilities are defined by the
sum of demand and currency and interest-bearing liabilities of financial institutions,
divided by GDP. It is usually used as an indicator for financial depth. Bank assets
are the value of claims on domestic real nonfinancial sector by deposit money banks
as GDP share. Private credit is equal to the value of credits by banks and non-banks
to private sector divided by GDP. The data for trade openness is collected from
World Development Indicator, published by World Bank (2019). As an indicator in
trade openness, trade share is used, in which the logarithm of sum of imports and
exports divide GDP (lto). In order to strengthen the results, this research also used
controls variables between financial development and trade openness.
This study estimates the long- and short-run relationships between trade
openness and financial development in East Asian and South Asian countries over
the period 2000-2016. Comparing a pooled mean group (PMG) estimator and a
mean group (MG) estimator. The regressions are separated based on income levels
and regions. The results emphasize that a pooled error correction term predicts that
there is a long run relationship between trade openness and financial development.
However, only bank assets are insignificant in any regressions. In the short run,
mostly financial development indicators are insignificant on trade openness in highand-
middle income countries. In addition, robustness test outlines the relationship
between trade openness and financial development are insignificant in the long run
and short run. It means that the relationship between trade and finance are
influenced by omitted variables.
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- MT - Economic and Management [2878]