Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/109579 
Year of Publication: 
2011
Series/Report no.: 
ADB Working Paper Series on Regional Economic Integration No. 79
Publisher: 
Asian Development Bank (ADB), Manila
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.
Subjects: 
emerging Asia
financial integration
cross-border financial flows
crossborder asset holdings
convergence of asset returns
JEL: 
F30
F36
F41
G15
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Working Paper

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