The Evolution of Asian Financial Linkages : Key Determinants and the Role of Policy

Author/Editor:

Selim Elekdag ; Phurichai Rungcharoenkitkul ; Yiqun Wu

Publication Date:

November 1, 2012

Electronic Access:

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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:

This paper examines how Asian financial linkages with systemic economies have changed over time. After developing a factor model, it estimates Asian financial sensitivities to systemic economies, and then seeks to uncover their key determinants, which include trade and financial linkages, as well as policies. In line with Asia’s growing role in the global economy—including through deeper financial integration—regional financial markets have become more sensitive to systemic economies. Asian financial sensitivities to systemic economies exhibit cyclical fluctuations, and reached historically high levels during the latest global financial crisis of 2008–09. While macroeconomic policy frameworks have helped Asian economies cope well with market turbulence, they cannot completely insulate Asian financial markets against major global financial shocks. 

Series:

Working Paper No. 12/262

Subject:

English

Publication Date:

November 1, 2012

ISBN/ISSN:

9781475588682/1018-5941

Stock No:

WPIEA2012262

Format:

Paper

Pages:

27

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