IDEAS home Printed from https://ideas.repec.org/p/ris/adbrei/0118.html
   My bibliography  Save this paper

The Financial Role of East Asian Economies in Global Imbalances: An Econometric Assessment of Developments after the Global Financial Crisis

Author

Listed:
  • Lee, Hyun-Hoon

    () (Kangwon National University)

  • Park, Donghyun

    () (Asian Development Bank)

Abstract

The central objective of this paper is to empirically assess how global imbalances have evolved since the global financial crisis of 2008/09. More specifically, we examine how the security investment positions of major East Asian economies in United States (US) financial markets—equities, bonds, and bank lending—changed after the crisis. Our econometric analysis, which is based on the gravity model to identify the determinants of foreign portfolio investment in the US, finds that the "overinvestment" of most East Asian economies in the US has remained substantial after the global financial crisis, especially in long-term bonds. That is, even after the crisis, most East Asian economies continue to hold excessive amounts of US securities, but the degree of overinvestment appears to have declined for some economies such as the PRC. However, the PRC still has the largest excessive holdings of US securities. We also find that East Asian economies over-invest in US financial markets largely due to excessive savings and foreign exchange reserves.

Suggested Citation

  • Lee, Hyun-Hoon & Park, Donghyun, 2013. "The Financial Role of East Asian Economies in Global Imbalances: An Econometric Assessment of Developments after the Global Financial Crisis," Working Papers on Regional Economic Integration 118, Asian Development Bank.
  • Handle: RePEc:ris:adbrei:0118
    as

    Download full text from publisher

    File URL: http://aric.adb.org/pdf/workingpaper/WP118_Lee_Park_The_Financial_Role_of_East_Asian_Economies.pdf
    File Function: Full text
    Download Restriction: no

    More about this item

    Keywords

    Global financial crisis; global imbalances; US; East Asia; portfolio investment;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:adbrei:0118. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ivan B. de Leon). General contact details of provider: http://edirc.repec.org/data/oradbph.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.