| The opening of the financial service trade market will be beneficial to improve not only the functioning qualities of national financial system, but also the level of overall national welfare. But many developing countries have not obtained as large the economic profit as expected, after the opening-up of national financial service industries to the outside world. In the current thesis, we hold that there are a lot of binding conditions when the developing countries push forward the liberalization of international financial service trade to achieve more or less benefits which are determined by the eliminating degree of these binding conditions. Accordingly, developing countries have to supplement the open-up of financial service trade market to the outside world with necessary corresponding reforms.I. Definitions Related to International Financial Service Trade and its LiberalizationWe consider the International Financial Service Trade as an exchange activity and an exchange process of financial services among countries (regions). Its target is the financial service, which could be comprehended from both a broad sense and a narrow sense. The former encompasses the financial bodies' whole business activities. The latter means the financial services based on service charges and commissions. We prefer the broad one in this essay.The Liberalization of International Financial Services Trade is a process and condition, in which a country or a region gradually decreases and eliminates all kinds of financial services' trade restraints and trade barriers. Its purpose is to gear the financial service trade activities into the orbit of free competition and to have the trade system changed from protected trade system to free trade system step by step.II. Theoretical Foundation of the AnalysisComparative advantage is still the benefit source of contemporary financial service trade liberalization. Technological disparity, one of the fundamental factors of comparative costs' difference for financial service industry in each country, determines the disparity of the financial innovation. Due to its particularity, the connotation of "capital" in financial service industry should be extended to include human resource. Therefore, it is in technology, capitals and talents that lie increasing comparative advantages in financial service industry.It is well known that developed countries export financial services to other developed ones and some developing ones. And the commercial presence established by the developed countries is mostly set up in relatively developed areas of host countries. All these have reflected the characteristic of Intra-Industry Trade. Therefore, the economy of scale is also one of the sources of interests deriving from liberalization.Theory of the National Competitive Advantage has guiding significance in dealing with the effect of liberalization in financial service trade. The competition of international financial service industries is subject not so much to basic factors such as natural or labor resources as to advanced factors such as knowledge, talents and communication methods. Demand conditions are important to financial service industries that rest on the support of other industries. Meanwhile, strategies, deployments and competition on the part of the financial service enterprises are important to the establishment of competitive advantages.III. Wealth Effects of the Liberalizationi. Static Wealth Effects of the LiberalizationThe static effect is the effect at a certain time-point. In the first situation, it is indicates the circumstance of complete liberalization produces the lowest price, largest demand and maximal consumer surplus, and consequently the maximal national profits. In the second situation, presuming the existence of monopolization, it is worse than the situation under free competition with higher price, less demand and larger social profits loss. Similar is the case in condition of restricted or open-up accession. Accordingly, from the view of social profits...
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