The Impact Of Financial Development On Trade Balance

The imbalance of trade balance is a major topic of concern for everyone after the development of economic globalization.With the globalization of the three areas of production,commodity circulation and capital circulation,the international trade and financial development mainly involved by more and more scholars.Unlike most scholars who have focused on international trade and economic development or the impact of financial development on economic growth,some scholars turn their attention to the perspective of financial development,pay attention to the impact of financial development on international trade,and explore from a new perspective.The cause of the imbalance in trade balance.Most of the existing literatures are analyzed from the interaction mechanism between financial development and international trade.The conclusions drawn are that financial development considers the development of international trade from the influence of financing constraints,savings-investment,international division of labor and many other factors.The connection of financial development.Most studies have concluded that financial development has a linear mechanism for international trade,that is,financial development promotes investment by promoting savings,reducing risks,optimizing allocation of resources,and improving financing constraints,thereby promoting investment and promoting trade balance as a source of comparative advantage.This article will use industry-level data to analyze the impact of financial development on trade balance imbalances using empirical methods,verify the non-linear relationship between financial development and trade balance,and explore from the perspective of external financing dependence.Different industries with different external financing dependence,financial development differences have different effects on industry trade balance.Based on the theory of heterogeneous enterprises,this paper analyzes the impact of financial development on trade balance from the behavior of enterprises.Through the micro-interpretation between financial development and trade balance,it is found that there is a nonlinear relationship between the two: when a country's financial development level is gradually improved,the level of financial development will rise after the trade balance will rise first.Downward trend.When a country's financial development is very low,the improvement of financial development level will promote the trade balance;and when a country's financial development is very high,the improvement of financial development level will have a deteriorating effect on trade balance.For industries with high dependence on external financing,the corresponding financial development level is higher than that of industries with low dependence.The reason for this inverted U-shaped relationship is that foreign direct investment(OFDI)has an alternative effect on exports when financial development is extremely high.This paper uses the panel data of 26 industries in 192 countries from 1995 to 2015 to empirically analyze the relationship between financial development and trade balance and the substitution effect of OFDI on exports.The full text is divided into five chapters,which examine the inverted U-shaped relationship between financial development and trade balance from both theoretical and empirical perspectives.According to the results of this paper,suggestions are made to improve the financial system,promote financial innovation,and reduce financial differences with developed countries by improving the scale and efficiency of the financial system in developing countries,so as to improve the current situation of trade balance imbalance.