Asia Pacific Financial Markets in Comparative Perspective: Issues and Implications for the 21st Century

The Asia Pacific region is a geographical appellation that many still feel with justification will be the dynamic economic arena for this century. Accepting this premise and acknowledging the importance of the role of finance in that development brings with it the imperative to gain a greater understanding of the unique financial characteristics of the region. This chapter has two major pursuits. The first goal is to provide some background on the various markets of the region. An understanding of institutional detail (size and scope) of the relevant markets affords a view that lends or detracts from the credibility of intermarket comparisons. An exposure to institutional detail also supplies information that may bear on the statistical results of the empirical analysis. The vital roles played by stock markets of pricing capital, issuing new shares, providing a liquidity-creating secondary feature, serving as a vehicle for asset transfer and providing a linkage to international capital markets are as important to emerging markets as to developed countries. However, fixed income markets are still not as well developed in emerging markets and therefore an even heavier capital sourcing burden is placed on emerging stock markets. The Asia Pacific region derivatives markets (futures and options) play their risk-transfer role in equity and fixed income areas and are integral to the scene. The second pursuit in this chapter is to provide a thumbnail sketch of each of the contributions. The summary will include the nature of the empirical work, the type of methodology or statistical technique applied, and the results. In addition the results will be viewed in light of any reinforcement or digression from a priori expectations drawn from other markets. This volume contains 19 original research papers from 36 authors who represent major academic and financial institutions around the globe.