Abstract
The global economy presents a situation of unbalanced development, and the imbalance of current account is the important aspect of global economic imbalance. This paper constructs the comparative advantage index of financial development and efficiency index of financial system that suits China’s national conditions, demonstratively analyzes how the financial development affects current account.
Highlights
With the increase of economic and trade between countries, the development of the world economy appears a more unbalanced phenomenon, especially the current account imbalance
According to the research of Caballero et al (2008), it can be found that the differences in the financial system supported by his research have an impact on the current account imbalance, which is believed to be due to the differences in the ability of one country to provide assets to the rest of the world
According to the research of Yang Zhenzeng and Lu Jianming (2011), the difference of international division of labor position and situation will lead to the current account imbalance phenomenon, while the increase of financial development difference will expand the scale of current account imbalance
Summary
With the increase of economic and trade between countries, the development of the world economy appears a more unbalanced phenomenon, especially the current account imbalance. The huge differences in the development of financial markets have led more and more scholars to explore the root cause of current account imbalance from the perspective of financial market differences. From a macro point of view, the difference of financial development level will lead to the difference of conversion efficiency from savings to investment. The difference of financial development level leads to the change of international division of labor, which makes some countries focus more on the financial industry, while others focus more on the real economy manufacturing industry and so on. Studying the current account imbalance from the perspective of financial development difference can reveal the important role of financial development difference in the current account imbalance, and provide new ideas for the current account imbalance research, and further promote the development of related research
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