TY - JOUR
T1 - The impact of trade and financial openness on bank loan pricing
T2 - Evidence from emerging economies
AU - Ashraf, Badar Nadeem
AU - Qian, Ningyu
AU - Shen, Yinjie (Victor)
N1 - Publisher Copyright:
© 2021 Elsevier B.V.
PY - 2021/6
Y1 - 2021/6
N2 - In this paper, we examine the impact of trade and financial openness on bank loan pricing. Using data from 35 emerging economies, we first document that higher trade and financial openness lower interest rates on gross bank loans using country-specific measures for trade and financial openness. We then confirm our findings using firm-specific measures for trade and financial openness and individual loan spread. Exploiting the accession to World Trade Organization (WTO) as a quasi-natural experiment, we observe loan interest rates declined in countries after joining the WTO. Overall, we imply that openness is beneficial for financial development in emerging economies.
AB - In this paper, we examine the impact of trade and financial openness on bank loan pricing. Using data from 35 emerging economies, we first document that higher trade and financial openness lower interest rates on gross bank loans using country-specific measures for trade and financial openness. We then confirm our findings using firm-specific measures for trade and financial openness and individual loan spread. Exploiting the accession to World Trade Organization (WTO) as a quasi-natural experiment, we observe loan interest rates declined in countries after joining the WTO. Overall, we imply that openness is beneficial for financial development in emerging economies.
KW - Bank loan pricing
KW - Emerging markets
KW - Financial openness
KW - Trade openness
UR - http://www.scopus.com/inward/record.url?scp=85099855323&partnerID=8YFLogxK
U2 - 10.1016/j.ememar.2021.100793
DO - 10.1016/j.ememar.2021.100793
M3 - Article
AN - SCOPUS:85099855323
SN - 1566-0141
VL - 47
JO - Emerging Markets Review
JF - Emerging Markets Review
M1 - 100793
ER -