Effects of Regional Financial Development on Current Account Balance in China—Based on the Perspective of Commodity Trade

doi:10.16716/j.cnki.65-1030/f.2020.01.003

Abstract

Abstract: Using panel data of China's 31 provinces over the period from 2007 to 2018, and the estimator of sys-GMM and dif-GMM methods, this paper aims to examine the relationship between financial development and current account balance in four difference regions, namely coastal and inland regions, border and non-border areas, and enjoy the level of preferential policies and the extend of financial control areas. The results of the regression show that financial development has a significantly and robust negative effect on the current account balance by used the full sample. Using the sub-sample of regions, however, financial development have a greater negative effect on the current account balance in coastal, non-border areas and those areas with high preferential policies and low financial control. Therefore, all regions of China should make full use of market-based financial means to replace administrative financial means and ensure the balance of current account continues.

Key words: Regional Financial Development, Current Account Balance, Trade of Goods, Trade Openness, Financial Openness, Sys-GMM Estimation Method, Financial Control, Financial Deepening, Balance of Trade

CLC Number:

F832.5

Liu Fang. Effects of Regional Financial Development on Current Account Balance in China—Based on the Perspective of Commodity Trade[J]. Finance & Economics of Xinjiang, 2020, (1): 27-38.

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