In this paper we explore linkages between financial services tradeand growth. We offer aformalization of the argument that trade, through the fostering offinancial market integration,may yield important long-run effects related to increasedcompetition. The relationshipsformalized here link long-run economic performance to scale economiesand cost structures inthe financial services sector, and to market concentration in thesector. We first develop ananalytical model. This motivates an econometric exercise. Cross-country growth regressionspoint to a strong positive relationship between financial sectorcompetition and financial sectoropenness, and between growth and financial sector competition.
financial services trade service trade and imperfect competition trade in services and growth