Financial System Architecture and the Patterns of International Trade

Since mid-1982 the existence of a “debt crisis” has been almost universally acknowledged; many would argue that the crisis had existed unrecognized for much longer, despite alarms sounded regularly over the preceding decade. The definition of the crisis in the Northern industrial countries was remarkably uniform: the onset of widespread difficulties in servicing the mountain of developing country debt threatened the stability of the international financial system. The nightmare in the North was an episode of onrushing financial collapse in the mold of those described so vividly by Charles Kindleberger—a default by a major debtor country (or domino defaults by debtors large and small), followed by the failure of a major bank or banks, a collapse of confidence in the financial system, and ultimately a sharp contraction of economic activity and international trade. The model was that of a panic; the fear, that the financial system, which had appeared so robust in dealing with successive shocks in the 1970s, might prove less so in the harsher circumstances of the 1980s.

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Financial Development, Fixed Costs, and International Trade

The Review of Corporate Finance Studies ◽

10.1093/rcfs/cfs005 ◽

2012 ◽

Vol 2 (1) ◽

pp. 1-28 ◽

Cited By ~ 39

Author(s):

Bo Becker ◽

Jinzhu Chen ◽

David Greenberg

Keyword(s):

International Trade ◽

Exchange Rates ◽

Product Design ◽

Financial Development ◽

Financial System ◽

Fixed Costs ◽

Specific Investments ◽

Trade Dynamics

Exports require significant up-front costs in product design, marketing, and distribution. These are intangible, firm-specific investments that are likely difficult to finance externally. We argue that a developed financial system can therefore facilitate exports. We test this prediction and find support for it. First, financial development is associated with more exports in industries in which fixed costs are high as well as to importers that require high costs. Second, trade dynamics are affected by financial development. In countries with better finance, exports are more sensitive to exchange rates. Finally, we predict and document that countries with more developed finance experience more volatile exports. (JEL F14, F36, G20, G30)

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“Isms” and “Zations”: on fictitious liquidity and endogenous financialization

Economia e Sociedade ◽

10.1590/1982-3533.2017v26n4art3 ◽

2017 ◽

Vol 26 (spe) ◽

pp. 879-893

Author(s):

Jan Kregel

Keyword(s):

International Trade ◽

Financial System ◽

Chinese Economy ◽

Payments System ◽

The Creation ◽

Insightful Analysis ◽

Production Decision

Abstract Financialisation has been represented as a recent phenomenon linked to the deregulation and globalization of the international trade and payments system that has been in progress since the opening of the Chinese economy in the 1980s. It is often represented as the dominance of finance over production or of monetary over real variables. This essay challenges the usefulness of this dichotomy, arguing in the tradition of Keynes, Schumpeter and Minsky that it is impossible to separate the financing of production into separate categories since a production decision always requires finance to be implemented. It instead suggests that it is the process of innovation in the creation of liquidity by the financial system that provides a more insightful analysis of the implications of financialisation.

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Financial System Architecture and the Co‐evolution of Banks and Capital Markets

The Economic Journal ◽

10.1111/j.1468-0297.2009.02345.x ◽

2010 ◽

Vol 120 (547) ◽

pp. 1021-1055 ◽

Cited By ~ 72

Author(s):

Fenghua Song ◽

Anjan V. Thakor

Keyword(s):

Capital Markets ◽

System Architecture ◽

Financial System

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