Financial Integration in Emerging Asia: Challenges and Prospects
AbstractUsing both quantity- and price-based measures of financial integration, this paper shows an increasing degree of financial openness and integration in emerging Asian markets. This paper also assesses the impact of a regional shock relative to a global shock on local equity and bond markets. The findings of this paper suggest that the regionâs equity markets are integrated more globally than regionally, although the degrees of both regional and global integration have increased significantly since the 1997/98 Asian financial crisis. However, emerging Asiaâs local currency bond markets remain generally segmented, being neither regionally nor globally integrated. A case can be made for the benefits of increased regional integration of financial markets. Financial integration at the regional level allows for the regionâs economies to benefit from allocation efficiency and risk diversification. The findings of this paper suggest that policymakers in the region must strike the right balance between maximizing the net benefits from regional and global financial openness, and minimizing the potential costs of financial contagion and crisis.
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Bibliographic InfoArticle provided by Japan Center for Economic Research in its journal Asian Economic Policy Review.
Volume (Year): 6 (2011)
Issue (Month): 2 (December)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1832-8105
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Other versions of this item:
- Park, Cyn-Young & Lee, Jong-Wha, 2011. "Financial Integration in Emerging Asia: Challenges and Prospects," Working Papers on Regional Economic Integration 79, Asian Development Bank.
- F30 - International Economics - - International Finance - - - General
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
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