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Determinants of Financial Integration in the East Asia-Pacific Region

Author

Listed:
  • Zohreh Shirani Fakhr

    (PhD candidate, Department of Economics, Faculty of Administrative Science and Economics, University of Isfahan, Iran)

  • Seyed Komail Tayebi

    (Associate Professor, Department of Economics, Faculty of Administrative Science and Economics, University of Isfahan, Iran)

Abstract

In this paper we argue about the determinants that influence the process of financial market integration in the East Asia-Pacific region. We question whether GDP, Exchange rate and real interest rate influence the financial integration. We construct a regression specification with respect to a probit/tobit panel model for our data set of the selected East Asia-Pacific countries over the 1990–2005 period. Generally, we find that macroeconomic indicators of the members are associated with higher or lower probability of integrating their financial markets and GDP has a positive effect on financial integration, while the results related to exchange rate and interest rate are ambiguous. The implication is that the elimination of exchange rate risk within the East Asia-Pacific region means the common currency, which reduces the remaining differences of investment and consumption opportunities across the member countries of the East Asia-Pacific during the implementation of financial integration.

Suggested Citation

  • Zohreh Shirani Fakhr & Seyed Komail Tayebi, 2009. "Determinants of Financial Integration in the East Asia-Pacific Region," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 14(1), pages 155-173, spring.
    • Handle: RePEc:eut:journl:v:14:y:2009:i:1:p:155
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    References listed on IDEAS

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    Cited by:

    1. Pasrun Adam & Ambo Wonua Nusantara & Abd AzisMuthalib, 2017. "Foreign Interest Ratesand the IslamicStock Market Integration between Indonesia and Malaysia," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(3), pages 639-659, Summer.
    2. Ibrahim A. Adekunle & Abayomi T. Onanuga & Ibrahim A. Odusanya, 2021. "Financial Integration and Growth Outcomes in Africa: Experience of the Trade Blocs," Research Africa Network Working Papers 21/052, Research Africa Network (RAN).
    3. repec:gei:journl:v:4:y:2017:i:1:p:136-150 is not listed on IDEAS
    4. Audi, Marc & Ehsan, Rehan & Ali, Amjad, 2022. "Does Globalization Promote Financial Integration in South Asian Economies? Unveiling the Role of Monetary and Fiscal Performance in Internationalization," MPRA Paper 119365, University Library of Munich, Germany, revised 2023.
    5. Shaikh Muhammad Saleem, 2017. "Does International Financial Integration Spur Economic Growth? Evidence from Pakistan," Journal of Management Sciences, Geist Science, Iqra University, Faculty of Business Administration, vol. 4(1), pages 116-130, March.

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