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Asian Financial Integration : Trends and Interruptions

Author/Editor: Eduardo Borensztein | Prakash Loungani
Authorized for Distribution: January 1, 2011
Electronic Access: Free Full Text (PDF file size is 905KB)
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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: The paper compares trends in financial integration within Asia with those in industrialized countries and other regional groups. Declines in cross-country dispersion in equity returns and interest rates suggest increased Asian integration, with the process interrupted by crises and global volatility. Cross-border equity and bond holdings have also increased, but Asian countries remain considerably more financially integrated with major countries outside the region than with those within the region. The paper also discusses whether potential benefits of regional financial integration, such as increased risk-sharing and stability of the investor base, have materialized.
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Series: Working Paper No. 11/4
Subject(s): Asia | Bond markets | Global Financial Crisis 2008-2009
Author's keyword(s): financial integration; Asia; equity premium; bond markets; gravity model; home bias; risk-sharing; herding
    Published:   January 1, 2011        
    ISBN/ISSN:   9781455211821/1018-5941   Format:   Paper
    Stock No:   WPIEA2011004   Pages:   41
    Price:   US$18.00
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