The Effect of Financial Market Integration on Monetary Policy and Long-term Interest Rate in Korea and Its Policy Implications
Kim, Kyunghun; Kim, Soyoung; Yang, Da Young; Kang, Eunjung | March 2018
Abstract
Financial market integration mitigates production shocks that occur in a country by pooling the risk through portfolio diversification and this contributes to consumption smoothing for life-time utility maximization. Financial market integration also contributes to economic growth by supplying capital to developing countries via the integrated financial market. However, the integrated financial market also serves as a transition channel where the financial shock which originated from the center country spreads to its neighboring economies. In the event of a financial crisis, there is a potential risk of capital flight from neighboring countries to the financial center, meaning that many countries in the integrated financial market have an economic structure that is vulnerable to external shocks.
Citation
Kim, Kyunghun; Kim, Soyoung; Yang, Da Young; Kang, Eunjung. 2018. The Effect of Financial Market Integration on Monetary Policy and Long-term Interest Rate in Korea and Its Policy Implications. © Korea Institute for International Economic Policy. http://hdl.handle.net/11540/8036.ISSN
2233-9140
Keywords
Asian Development Bank
Development
Regional Economic Integration
Financial Sector Policies
Financial Risk Management
Bond Financing
Economic integration
Development Bank
Capital Market
Regional Plans
Regional Development Bank
Development finance
Municipal Bonds
Development Banks
Local government bonds
Bonds
Catastrophe bonds
Bond funds
Bond market
Multilateral development banks
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Citable URI
http://hdl.handle.net/11540/8036Metadata
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