Financial Integration in Emerging Asia: Challenges and Prospects
Park, Cyn-Young; Lee, Jong-Wha | May 2011
Abstract
Using 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.
Citation
Park, Cyn-Young; Lee, Jong-Wha. 2011. Financial Integration in Emerging Asia: Challenges and Prospects. © Asian Development Bank. http://hdl.handle.net/11540/2031. License: CC BY 3.0 IGO.Keywords
Trade Finance
Rural Finance
Regional Development Finance
Public Financial Management
Public Finance
International Finance
Intergovernmental Finance
Financial System
Financial Flows
Financial Assets
Finance And Trade
Trade Finance
Local Finance
International Monetary Relations
Local Finance
Banks
Capital Market
financial statistics
Foreign trade
Municipal government
Metropolitan government
International banks and banking
Capital movements
Central banks and banking
Bills of exchange
Swaps
Banks and banking
Stock exchanges
Market
Exchange
Balance of trade
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