This study analyzes the impact of trade openness on financial development in eight ASEAN countries from 2001 to 2021. A fixed effects model is used to control for country-specific differences, while two-stage least squares (2SLS) with instrumental var...
This study analyzes the impact of trade openness on financial development in eight ASEAN countries from 2001 to 2021. A fixed effects model is used to control for country-specific differences, while two-stage least squares (2SLS) with instrumental variables and dynamic panel analysis are applied to mitigate endogeneity issues. The results consistently indicate that trade liberalization has a positive effect on financial development across all methodological approaches. These findings suggest that trade liberalization plays a crucial role in financial development. Accordingly, ASEAN countries should actively consider policies that promote trade liberalization as part of their financial development strategies.