Author ORCID Identifier

Date Available


Year of Publication


Degree Name

Doctor of Philosophy (PhD)

Document Type

Doctoral Dissertation


Business and Economics



First Advisor

Dr. Jenny Minier


My dissertation consists of three papers on finance and economic performance across countries. The first paper applies the gravity model of international trade to quantify the impact of the banking sector and the stock market on bilateral trade patterns. Following the study of capital structure, I evaluate the mix of external financing sources used for real investment at the macroeconomic level by differentiating between the relative roles of the banking sector and stock market development in determining trade patterns. Using aggregate bilateral trade data for 87 countries over 1976-2012, I find that stock market development has a substantial impact on trade, distinct from the effect of the banking sector. There is ample evidence to suggest that there is a heterogeneous effect of banking at different levels of stock market development, indicating a substitutability between the banking sector and the stock market as sources of finance. This is true for both the poor and non-poor country samples. Moreover, I find some evidence indicating the importance of the importer's stock market development for bilateral trade after dividing my sample by income groups.

There is a consensus that financial development boosts economic performance. However, this literature relies on aggregate measures of financial development and rarely accounts for the distribution of access to finance across the population. How does financial inclusion, or the distribution of access to finance, affect growth? In my second paper, in order to capture the distribution of financial products, I include three financial inclusion variables. I explore the collective impact of the financial variables on three poverty measures. Controlling for time fixed effects and using an unbalanced panel dataset, I find that growth is less likely to increase in countries with already developed financial infrastructures. In the case of poverty as the dependent variable, the outcomes are not the same across all inclusion variables. Poverty is more likely to decrease in countries with fewer people having bank accounts and savings following an increase in financial development, but this effect does not occur when the measure of financial inclusion is borrowing. Borrowing only reduces poverty in countries that already have high access to financial products, but this is not true for developing countries that have lower access to basic financial services.

There is a large body of literature that provides evidence for the positive association between financial development and measures of international trade, however, the role of financial development in affecting the extensive and intensive margins of trade has not been widely studied. My third paper seeks to investigate if increases in financial development increase trade diversification thus creating new trading relationships (extensive margin) and if it increases trade volumes for existing products thus maintaining existing trade relationships (intensive margins). Utilizing disaggregated product level data on exports, this paper finds that an increase in financial development increases the extensive margin. The analysis is also conducted for five different product categories. Evidence suggests that financial development increases total trade only for low-tech manufactured goods, while it increases the intensive margin for low-tech and high-tech manufactured goods only. This may have important implications for export-based policy making, especially in developing countries that aim to increase exports to increase long-term economic growth.

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