Drivers of Financial Integration – Implications for Asia

By Nasha Ananchotikul, Shi Piao, Edda Zoli

July 17, 2015

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Nasha Ananchotikul, Shi Piao, and Edda Zoli. Drivers of Financial Integration – Implications for Asia, (USA: International Monetary Fund, 2015) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Deeper intraregional financial integration is prominent on Asian policymakers’ agenda. This paper takes stock of Asia’s progress toward that objective, analyzing recent trends in cross-border portfolio investment and bank claims. Then, it investigates the drivers of financial integration by estimating a gravity model of bilateral financial asset holdings on a large sample of source and destination countries worldwide, focusing in particular on the role of regulation and institutions. The paper concludes that financial integration in Asia could be enhanced through policies that lower informational frictions, continue to buttress trade integration and capital market development, remove restrictions to foreign flows and bank penetration, and promote a common regulatory framework.

Subject: Balance of payments, Capital account, Financial institutions, Financial integration, Financial markets, Foreign banks, Portfolio investment, Stock markets

Keywords: Asia, Asia and Pacific, Bank, Bank claim, Banking regulation Index, Capital account, Capital account, Financial integration, Foreign banks, Investment, Market size, Portfolio investment, Portfolio investment, Regulation, Security exchange regulation, Southeast Asia, Stock markets, WP

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/160
Stock No:

WPIEA2015160
ISBN:

9781513554815
ISSN:

1018-5941

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