How does terms-of-trade behavior shape international financial integration in primary-commodity exporting economies?

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This paper presents empirical evidence suggesting that the volatility, trend-growth, and shock-duration of terms-of-trade (TOT) are important drivers of the degree and composition of international financial integration (IFI). Our results are based on a panel of 55 primary-commodity exporting countries during 1980-2007. The findings reveal that TOT trend-growth has larger impact on IFI compared to TOT volatility. Also, higher TOT volatility is robustly associated with greater cross-holdings of foreign assets and lower cross-holdings of foreign liabilities. Another notable finding is that longer duration of TOT shocks seems to shift IFI towards equity assets.

Original languageEnglish
Pages (from-to)335-353
Number of pages19
JournalJournal of International Financial Markets, Institutions and Money
Volume33
DOIs
Publication statusPublished - Dec 1 2014

Fingerprint

Primary commodities
Exporting
International financial integration
Terms of trade
Assets
Cross-holdings
Equity
Empirical evidence
Liability
Terms of trade shocks

Keywords

  • Developing countries
  • Financial globalization
  • Foreign direct investment
  • International investment positions
  • Portfolio investment
  • Terms-of-trade

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this

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title = "How does terms-of-trade behavior shape international financial integration in primary-commodity exporting economies?",
abstract = "This paper presents empirical evidence suggesting that the volatility, trend-growth, and shock-duration of terms-of-trade (TOT) are important drivers of the degree and composition of international financial integration (IFI). Our results are based on a panel of 55 primary-commodity exporting countries during 1980-2007. The findings reveal that TOT trend-growth has larger impact on IFI compared to TOT volatility. Also, higher TOT volatility is robustly associated with greater cross-holdings of foreign assets and lower cross-holdings of foreign liabilities. Another notable finding is that longer duration of TOT shocks seems to shift IFI towards equity assets.",
keywords = "Developing countries, Financial globalization, Foreign direct investment, International investment positions, Portfolio investment, Terms-of-trade",
author = "{Saif Al-Abri}, Almukhtar",
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AB - This paper presents empirical evidence suggesting that the volatility, trend-growth, and shock-duration of terms-of-trade (TOT) are important drivers of the degree and composition of international financial integration (IFI). Our results are based on a panel of 55 primary-commodity exporting countries during 1980-2007. The findings reveal that TOT trend-growth has larger impact on IFI compared to TOT volatility. Also, higher TOT volatility is robustly associated with greater cross-holdings of foreign assets and lower cross-holdings of foreign liabilities. Another notable finding is that longer duration of TOT shocks seems to shift IFI towards equity assets.

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