Document Type : Research Paper
Authors
1
M.Sc. in Economics, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Iran.
2
Associate Professor, Department of Economics, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Kerman, Iran
3
Professor of Economics, Faculty of Economics and Management Shahid Bahonar University of Kerman, Kerman, Iran.
10.22034/ecoj.2025.66821.3421
Abstract
This study examines the impact of various macroeconomic, institutional, and central bank policy factors on financial development and international trade in 14 selected countries during the period 2012–2022. Panel regression models with fixed effects were employed to analyze the annual data. The dependent variables include financial structure (domestic credit to the private sector) and financial openness (exports and imports). The independent variables consist of economic growth, government effectiveness, foreign direct investment, exchange rate, corruption control, trade account balance, broad money, central bank assets, inflation, interest rate, per capita income, and private sector credit. The results indicate that economic growth and government effectiveness have a negative and significant impact on domestic credit to the private sector. In contrast, corruption control, foreign direct investment, and broad money have a positive and significant effect on financial development. Additionally, interest rates and inflation exhibit a negative and significant influence on domestic credit to the private sector. In the second model, the findings reveal that economic growth, exchange rates, and central bank reserves have a positive and significant effect on exports and imports. Conversely, per capita income and trade account balance negatively impact foreign trade. These findings underscore the critical role of central bank policies and institutional indicators in enhancing financial development and international trade.
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