Financial Development and International Agricultural Trade: Is There a Connection

This study empirically investigates the possible link between financial development and international agricultural trade using binomial models of the gravity equations. Financial development is measured by a constructed financial reforms index. The results provide some evidence on the positive impacts of financial reform on agricultural exports. The results further indicate that countries with a greater degree of financial development as exhibited by advanced countries tend to have larger impacts on agricultural exports. Bilateral trade involving advanced countries has a larger magnitude of impacts of financial reforms on agricultural trade than those involving developing countries.