Effect of Financial Development on Export Trade in China

Abstract

This study decomposes export trade into three dimensions: size, structure, and mode in 1987–2018 China’s relevant financial development and export trade. The study applies regression in the corresponding empirical analysis method and finds that excessive financial development reduced the growth of international trade scale, had less effect on the structure of export trade, and reduced the proportion of processing trade. Its marginal contribution lies in a comprehensive and accurate understanding of the impact of financial development on export trade. Financial development should be kept stable; otherwise, it will reduce export trade or even hinder the development of export trade. Therefore, China should maintain the coordinated development of finance and export trade, not excessively pursue the expansion of the scale of financial development, maintain a reasonable financial development structure, and improve the efficiency of financial development. China should pay attention to the phenomenon of diminishing marginal efficiency of financial development.