Title Page
WP/21/260
IMF Working Paper
Barriers to Trade in Financial and Insurance Services: Evidence from the United Kingdom
by Jiřà Podpiera
IMF Working Papers describe research in progress by the author and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
INTERNATIONAL MONETARY FUND
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© 2021 International Monetary Fund
WP/21/260
IMF Working Paper
Monetary and Capital Markets
Barriers to Trade in Financial and Insurance Services: Evidence from the United Kingdom
Prepared by Jiri Podpiera1
Authorized for distribution by Montfort Mlachila
October 2021
IMF Working Papers describe research in progress by the author and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Abstract
Distance, as a proxy for trade banies, is found in many studies to matter even for weightless cross-border financial investments and lending, possibly due to the presence of information asymmetries. Its importance is tested in this paper using exports of all five broad categories of the U.K.’ s financial and insurance services. No trade barriers are found for the bulk of the U.K.’s exports. Trade barriers are confirmed only for interest-bearing activities – being in line with available results in the literature. The positive effect of EU membership appears to be small. Notwistanding the uncertainties, it suggests that post-Brexit disruptions of the U.K.’s export of financial and insurance services may be minor.
JEL Classification Numbers: F14;G21;G22; C24
Keywords: Export; Gravity Model; Financial Services; Insurance; Censored Regression
Author’s E-Mail Address: Jpodpiera@imf.org
Contents
Abstract
I. Introduction
II. Methodology
III. Data Description
IV. Results
A. Financial Services
B. Insurance and Reinsurance Services
V. Robustness Analysis
A. Financial Services
B. Insurance and Reinsurance Services
VI. Conclusion
I would like to thank Romain Bouis, Martin Čihák, Zhengwei Fu, Montfort Mlachila, and participants at the IMF Policy Forum seminar for their helpful comments and suggestions.