%0 Journal Article
%T Capital Flows, Trade and the Role of the Financial System
%A Emmanuel Amissah
%J Modern Economy
%P 1592-1617
%@ 2152-7261
%D 2018
%I Scientific Research Publishing
%R 10.4236/me.2018.99099
%X In this study, we examine the crucial role played by
financial development in the relationship between trade and capital flows.<span style=\"font-family:;\" \"=\"\"> </span><span style=\"font-family:Verdana;\">We
examine this relationship for 130 countries from 1980 to 2005 for different
types of capital flows. We show that the</span><span style=\"font-family:;\" \"=\"\"> </span><span style=\"font-family:Verdana;\">relationship
depends on the type of capital flows and the level of financial development. We
observe a positive interaction between trade liberalisation and financial
development for portfolio flows. In the case of FDI</span><span style=\"font-family:;\" \"=\"\"> </span><span style=\"font-family:Verdana;\">(Foreign
Direct Investment), we observe an insignificant relationship. The FDI</span><span style=\"font-family:;\" \"=\"\"> </span><span style=\"font-family:Verdana;\">flows
bypass the financial system as it flows into such countries because of other
factors as side the level of the financial development.</span>
%K Financial Development
%K Trade Liberalisation
%K Capital Flows
%U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=87579