Financial Development And Foreign Trade:Evidence From Yangtze River Delta

With the economic globalization, the finance and the trade is increasingly becoming the core and the engine that drives economic growth, meanwhile the fusion and interaction between finance development and foreign trade is increasingly becoming prominent in the region as well as inter-region. Yangtze River delta is typically representative of China’s export-oriented economy development, and is a leader in the financial development process. In the context of China’s foreign trade growth slowing down, the research on the intrinsic link between finance development and foreign trade in Yangtze River delta have important practical significance.After a literature review about financial development and foreign trade, the characteristics and statuses of financial development of Yangtze River Delta are firstly analyzed from three aspects of scale structure and efficiency. Secondly, this paper studies the development situation of foreign trade and discusses the inherent problems. Finally, the experience influence regard to financial development on the scale and structure of foreign trade is tested.Applying the panel data of16prefecture-level cities in Yangtze River delta and using the fixed effects and the first-order differential estimate technical, this paper finds that bank intermediation development significantly promotes trade scale, and stock market development impedes foreign trade to a certain extent. This paper also finds that financial intermediation development significantly promotes upgrading of export trade structure using the panel data on two provinces and one city in Yangtze River delta and seemingly unrelated regressions (SUR) estimate technical. The empirical results suggest that further accelerating the process of financial intermediation is of great significance for promoting the development of foreign trade and economic growth in the Yangtze River delta region.