The Relationship Between Financial Development and Logistics Performance in APEC Countries

Financial development reflects the health of the banking sector, the efficiency of capital markets, and the strength of the financial infrastructure. Thus, it plays a critical role in economic growth, investment opportunities, resource allocation, and supporting foreign trade activities. Logistics ensures the efficient management and transportation of products, services, and resources within the supply chain in the context of foreign trade activities. This study aims to examine the capital and finance that support production and their effects on logistics, which provide access to the market, specifically for APEC (Asia-Pacific Economic Cooperation) countries. In other words, the hypothesis to be tested is that financial institutions and financial markets, the two main elements of logistics performance, play a more effective role in a mechanism that operates indirectly from production to logistics. Since the logistics performance index data obtained from the World Bank for this study begins in 2007, the research period is from 2007 to 2018. Financial development data were obtained from the IMF database, and a Tobit analysis was used to examine the relationship between the variables. The analysis revealed that the development level of financial institutions and markets positively affects logistics performance, and financial institutions are relatively more effective than financial markets. The analysis also revealed that openness positively affects logistics performance.