Financial integration in emerging Asia

Challenges and prospects

Cyn Young Park, Jong-Wha Lee

Research output: Contribution to journalArticle

22 Citations (Scopus)

Abstract

Using both quantity- and price-based measures of financial integration, the paper shows an increasing degree of financial openness and integration in emerging Asia. Assessing the impact of a regional shock relative to a global shock on local equity and bond markets, the findings 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 1997/1998 Asian financial crisis. However, emerging Asia's local currency bond markets remain generally segmented, being neither regionally nor globally integrated. There are potential benefits from 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. 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.

Original languageEnglish
Pages (from-to)176-198
Number of pages23
JournalAsian Economic Policy Review
Volume6
Issue number2
DOIs
Publication statusPublished - 2011 Dec 1

Fingerprint

equity
market
financial market
financial crisis
currency
regional integration
diversification
cost
efficiency
economy
Asia
Financial integration
Emerging Asia
costs
Equity markets
Regional integration
Financial openness
Bond market
Integrated
allocation

Keywords

  • Asian financial integration
  • Capital flow volatility
  • Contagion and spillover
  • Convergence of asset return
  • Cross-border asset holding

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Management, Monitoring, Policy and Law
  • Political Science and International Relations

Cite this

Financial integration in emerging Asia : Challenges and prospects. / Park, Cyn Young; Lee, Jong-Wha.

In: Asian Economic Policy Review, Vol. 6, No. 2, 01.12.2011, p. 176-198.

Research output: Contribution to journalArticle

@article{96a61a48ef46484aaf2ba8e16149ec88,
title = "Financial integration in emerging Asia: Challenges and prospects",
abstract = "Using both quantity- and price-based measures of financial integration, the paper shows an increasing degree of financial openness and integration in emerging Asia. Assessing the impact of a regional shock relative to a global shock on local equity and bond markets, the findings 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 1997/1998 Asian financial crisis. However, emerging Asia's local currency bond markets remain generally segmented, being neither regionally nor globally integrated. There are potential benefits from 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. 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.",
keywords = "Asian financial integration, Capital flow volatility, Contagion and spillover, Convergence of asset return, Cross-border asset holding",
author = "Park, {Cyn Young} and Jong-Wha Lee",
year = "2011",
month = "12",
day = "1",
doi = "10.1111/j.1748-3131.2011.01193.x",
language = "English",
volume = "6",
pages = "176--198",
journal = "Asian Economic Policy Review",
issn = "1832-8105",
publisher = "Wiley-Blackwell",
number = "2",

}

TY - JOUR

T1 - Financial integration in emerging Asia

T2 - Challenges and prospects

AU - Park, Cyn Young

AU - Lee, Jong-Wha

PY - 2011/12/1

Y1 - 2011/12/1

N2 - Using both quantity- and price-based measures of financial integration, the paper shows an increasing degree of financial openness and integration in emerging Asia. Assessing the impact of a regional shock relative to a global shock on local equity and bond markets, the findings 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 1997/1998 Asian financial crisis. However, emerging Asia's local currency bond markets remain generally segmented, being neither regionally nor globally integrated. There are potential benefits from 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. 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.

AB - Using both quantity- and price-based measures of financial integration, the paper shows an increasing degree of financial openness and integration in emerging Asia. Assessing the impact of a regional shock relative to a global shock on local equity and bond markets, the findings 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 1997/1998 Asian financial crisis. However, emerging Asia's local currency bond markets remain generally segmented, being neither regionally nor globally integrated. There are potential benefits from 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. 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.

KW - Asian financial integration

KW - Capital flow volatility

KW - Contagion and spillover

KW - Convergence of asset return

KW - Cross-border asset holding

UR - http://www.scopus.com/inward/record.url?scp=83155163919&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=83155163919&partnerID=8YFLogxK

U2 - 10.1111/j.1748-3131.2011.01193.x

DO - 10.1111/j.1748-3131.2011.01193.x

M3 - Article

VL - 6

SP - 176

EP - 198

JO - Asian Economic Policy Review

JF - Asian Economic Policy Review

SN - 1832-8105

IS - 2

ER -