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 region’s 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 Asia’s 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 region’s 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 InfoPaper provided by Asian Development Bank in its series Working Papers on Regional Economic Integration with number 79.
Length: 48 pages
Date of creation: 01 May 2011
Date of revision:
emerging Asia; financial integration; cross-border financial flows; crossborder asset holdings; convergence of asset returns;
Other versions of this item:
- Cynâ€Young PARK & Jongâ€Wha LEE, 2011. "Financial Integration in Emerging Asia: Challenges and Prospects," Asian Economic Policy Review, Japan Center for Economic Research, Japan Center for Economic Research, vol. 6(2), pages 176-198, December.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-25 (All new papers)
- NEP-IFN-2011-06-25 (International Finance)
- NEP-OPM-2011-06-25 (Open Economy Macroeconomics)
- NEP-SEA-2011-06-25 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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