To Study The Impacts Of Financial Development In Our Country For Trade Development

The influence generated by finance development on international trade has not been made significant in any theory relating to international trade. The intersection of these two fields is not explored. Since the theory of finance development is established in1980’s, scholars have commenced their study on this intersection. Many works now reveal that the financial development and international trade development do have interplays on each other. Due to different levels of financial development, reached by different country, this mutual effect takes different forms. This thesis is based on the general mechanism of this mutual effect, and takes the development in China since the opening-up as a reference to search the interrelations of the two facts with empirical analysis using historical data.This paper firstly clarifies the significance and the background of this topic, and makes a literature review. Then it introduces the financial and trade development in China, since1978. The further study on general mechanism of interplay by finance and trade development shows that, financial depression distorts international trade, and induces trade protection; meanwhile, financial development promotes trade in ways that it provides finance to export, favors the trade structure and facilitates trade liberalization. The empirical analysis goes after the theoretical approach to the case in China. After the index and selection, the model establishing and co-integration and Granger tests, a conclusion is reached.The empirical result indicates that, the regression of finance and trade development is significant. Relative indexes’ result explains that, the unadvanced and unbalanced structure of finance development in China restrains the total trade volume; meanwhile, the progress of efficiency does promote the upgrading of trade structure. Through Granger test, we can discover that, relative indexes of finance development are the one-way Granger cause of trade scale, but not the Granger cause of trade structure. In the last part, comes with policy advice on promoting trade competitiveness from the aspect of financial development.