Empirical Research On The Relationship Between Financial Services Trade Liberalization And Economic Growth

With the rise of financial globalization, countries have paid more and more attention to financial services trade liberalization which is an important component of the financial globalization. In the WTO Uruguay Round, trade in services has been formally incorporated into the negotiation system, and the liberalization of financial service trade emerges on the historical stage. So does the liberalization of financial trade, as was alleged by the economists, really help with the economic growth of one country? And if the answer is affirmative, how does it work? At the time of global financial crisis, an explore into this issue have even more special and important significance. By investigating the relationship between the liberalization of financial service trade and financial development, and the relationship between financial development and economic growth, we established the bridge between the liberalization and economic growth. The effect of financial service liberalization on growth is further understood, and it will help with the formulation of policies on financial market.This paper is divided into five parts. The first part is introduction. The second part is the definition of concepts and the review to literatures. The third part is theoretical analysis, in which the relationship between financial service trade and economic growth is established theoretically. The fourth part is empirical analysis, which is the focus of the thesis. This paper used the regression analysis with panel data of 145 countries in 1993-2007. Countries are divided into developing and developed countries for a comparative analysis, in order to seek the effect of financial services trade liberalization on economic growth. In the last part, conclusions are made, and policy recommendations are raised, based on the theoretical and empirical analysis, and also the reality of our country.The main conclusions are as following.1. Financial services trade liberalization has an indirect role in promoting economic growth, via the promotion of financial development.2. Financial services trade liberalization has different growth effects in countries on different levels of development. For developing countries, financial services trade liberalization can promote financial development and has significant positive impact on economic growth.3. In the empirical results of the developed countries, the growth effect of financial services trade liberalization was not obvious, or even negative effects. It suggests that a high degree of financial openness on economic growth may tend to result in negative effects. It seems that the rapid spread and the negative impact on economic growth of the present financial crisis in the developed country is a confirmation.