The Relationship Between Financial Development and International Trade in Countries Selected for Outlook 1404

The impact of financial development on economic growth is one of the major economic subjects that has generated much debate and controversy. Some economists believe that financial development through increased levels of savings and investment can provide a good basis for economic growth. Some other emphasize the transfer of financial development to economic growth through its effects on resource allocation and capital efficiency. In this study, considering the significance of financial sector and its role in economic functions such as international trade and considering the fact that the literature on the relationship between financial development and international trade has expanded in recent years and has attracted the attention of researchers, the relationship between financial development and international trade has been investigated using the GMM Dynamic Panel Method for 16 countries in the Middle East. Fitting results from 1980 to 2016 indicate that financial development has had a positive impact on international trade. The ratio of bank credit to private sector to GDP, the ratio of liquidity to GDP, the ratio of money supply to GDP , and the ratio of domestic investment to GDP have a positive and significant relationship with international trade.