FINANCIAL DEVELOPMENT AND TRADE OPENNESS: A TIME SERIES ANALYSIS

The paper investigates the correlation between financial development and trade openness in Vietnam. Time series data are collected from 2005:Q1 to 2018:Q4. The author employs the autoregressive distributed lag (ARDL) approach which shows it appropriateness for empirical research using relatively short time series (less observations), particularly with developing countries like Vietnam. The results report the unidirectional impact of financial development on trade openness in the short run and long run, which is mainly positive. The results are essential not only for Vietnam but also for other developing nations around the world. Based on them, the policy makers are able to develop suitable policies for the improvement of financial development together with an effective and sustainable import-export operation.