The Nexus between Financial Development and Exports Performance: A Re-Assessment with the Structural Gravity Model

The aim of this paper is to re-examine the relationship between financial development and international trade within structural gravity model. Unlike previous literature, we implement an identification strategy that considers intra-national flows in addition data order deal with issues perfect collinearity multilateral resistances terms (MRTs). Using a sample 64 countries two frameworks (cross-sectional panel) applying OLS/2SLS estimator PPMLHDFE estimator, our findings support promoting effect indicators on exports all manufacturing goods relative domestic trade. This performance disproportionately higher for final than intermediate inputs. Importantly, research demonstrates existence heterogeneous direct impact depending level economic across industries.