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Does the Financial Integration in ASEAN+3 Respond to Financial Cooperation Agreement and Influence the Real Sectors?

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  • Md. Saifur Rahman

    (Department of Economics, Finance and Marketing, Collage of Business, RMIT University, Melbourne, Australia)

  • Farihana Shahari

    (Department of Finance, Faculty of Economics and Management Science, International Islamic University Malaysia, Gombak-53100, Selangor, Malaysia)

Abstract

This paper aims to investigate the degree of financial integration by employing Markov Switching (MS) technique. It further examines the influence of financial integration on the real sectors by employing GMM approach. The finding indicates following outcomes; (1) the financial markets of ASEAN+3 economies are weakly integrated during pre-agreement periods; (2) the degree of financial integration improves during post-agreement period in which financial integration has positive influence on the real economy; (3) higher degree of financial integration indicates a positive influence on the real economies. Finally, this study offers policy implication for stabilizing the real economy.

Suggested Citation

  • Md. Saifur Rahman & Farihana Shahari, 2019. "Does the Financial Integration in ASEAN+3 Respond to Financial Cooperation Agreement and Influence the Real Sectors?," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 22(01), pages 1-18, March.
    • Handle: RePEc:wsi:rpbfmp:v:22:y:2019:i:01:n:s0219091519500024
    DOI: 10.1142/S0219091519500024
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