International Economics Commons^™

What, Why And How Financial Development Matters: Evidence Of Asean-5, Asia-5 And Oecd-7 Economies, Swee Liang Tan

Research Collection School Of Economics

This paper analyzed the association between bank and capital markets financial development with income per capita in three regions; ASEAN-5 economies (Singapore, Malaysia, Thailand, Philippines, Indonesia), Asia-5 (Japan, China, Hong Kong SAR, South Korea, and India), and OECD-7 (Australia, Canada, Denmark, Norway, Sweden, UK, and US) from 2000 to 2017 using panel data regressions. A key lesson ASEAN-5 can learn from Asia-5 and OECD-7 experience is that bank size does matter despite digital disruptions to their banking system; yet large financial structure that favors banks is negatively associated with Asia-5, and importantly, efficient banking system (not bank size alone) is …

Trade Integration, Income Divergence, And Global Imbalances, Haiping Zhang

Research Collection School Of Economics

We embed financial frictions and sector-specific minimum investment requirements (MIR) in a two-factor, two-sector, overlapping-generation model and showthat whether trade integration leads to convergence of the income levels among member states depends on their level of financial development. It helps reconcilethe mixed empirical evidence on trade integration and income dynamics in differentgroups of countries from the institutional perspective. In the recent decades, trade globalization has allowed developed countries to specialize towards the high-MIR, high-return production stages and tasks through international fragmentation of production and global sourcing. In our model, the “sectors” can be interpreted broadly as production stages and tasks. …

Financial Development, International Capital Flows, And Aggregate Output, Jürgen Von Hagen, Haiping Zhang

Research Collection School Of Economics

We develop a tractable two-country overlapping-generations model and show that cross-country differences in financial development can explain three recent empirical patterns of international capital flows: Financial capital flows from relatively poor to relatively rich countries, while foreign direct investment flows in the opposite direction; net capital flows go from poor to rich countries; despite its negative net international investment positions, the United States receives a positive net investment income. International capital mobility affects output in each country directly through the size of domestic investment and indirectly through the aggregate saving rate. Under certain conditions, the indirect effect may dominate the …

Essays On International Trade And Finance, Amat Adarov

Graduate Theses and Dissertations

The dissertation consists of three papers exploring the macroeconomic implications of heterogeneity of countries in financial development, economic interconnectedness via trade and financial linkages.

Chapter 1 examines whether countries which are more centrally located in the global trade network have more synchronized stock markets. Global trade data is used to construct a novel measure of random walk betweenness centrality (RWBC), measuring the extent to which a country lies on random pathways in-between other countries and is therefore likely to be a conduit in the transmission of a shock across global markets. Based on a panel dataset of 58 countries over …

International Capital Flows With Limited Commitment And Incomplete Markets, Jürgen Von Hagen, Haiping Zhang

Research Collection School Of Economics

Recent literature has proposed two alternative types of financial frictions, i.e., limited commitment and incomplete markets, to explain the patterns of international capital flows between developed and developing countries observed in the past two decades. This paper integrates both types of frictions into a two-country overlapping-generations framework to facilitate a direct comparison of their effects. In our model, limited commitment distorts the investment made by agents with different productivity, which creates a wedge between the interest rates on equity capital vs. credit capital; while incomplete markets distort the investment among projects with different riskiness, which creates a wedge between the …

International Capital Flows And Aggregate Output, Jurgen Von Hagen, Haiping Zhang

Research Collection School Of Economics

We develop a tractable multi-country overlapping-generations model and show that cross-country differences in financial development explain three recent empirical patterns of international capital flows. Domestic financial frictions in our model distort interest rates and aggregate output in the less financially developed countries. International capital flows help ameliorate the two distortions. International flows of financial capital and foreign direct investment affect aggregate output in each country directly through affecting the size of aggregate investment. In addition, they affect aggregate output indirectly through affecting the composition of aggregate investment and the size of aggregate savings. Under certain conditions, the indirect effects may …