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Drivers of Financial Integration: Implications for Asia

Author

Listed:
  • Nasha Ananchotikul
  • Shi Piao
  • Edda Zoli

Abstract

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.

Suggested Citation

  • Nasha Ananchotikul & Shi Piao & Edda Zoli, 2016. "Drivers of Financial Integration: Implications for Asia," PIER Discussion Papers 39, Puey Ungphakorn Institute for Economic Research.
    • Handle: RePEc:pui:dpaper:39
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    File URL: https://www.pier.or.th/files/dp/pier_dp_039.pdf
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    References listed on IDEAS

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    Cited by:

    1. Guglielmo Maria Caporale & Luis A. Gil-Alana & Kefei You, 2019. "Stock market linkages between the ASEAN countries, China and the US: a fractional cointegration approach," CESifo Working Paper Series 7537, CESifo.

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    More about this item

    Keywords

    Financial Integration; Globalization; Gravity Model;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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