The Changing Landscape of Financial Integration in Asia-Pacific

IMF Working Papers, July 17, 2026

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Canonical URL: The Changing Landscape of Financial Integration in Asia-Pacific

Authors: Cristian Alonso, Tristan Hennig, Henry Hoyle, Haibo Li, Monica Petrescu, Ying Xu, Yizhi Xu
Published: July 17, 2026
Series: IMF Working Papers
DOI: https://doi.org/10.5089/9798229055260.001

Assesses whether Asia-Pacific’s expanding share in global trade and GDP has been matched by a commensurate expansion in its role in global finance.
Methodology:
- Descriptive analyses of past trends in crossborder financial positions.
- Network analysis to characterize evolution of inter- and intra-regional financial linkages.
- Gravity model analysis to test associations between trade and different types of financial flows.

Asia-Pacific’s role in global finance still significantly lags its role in global trade.
Considerable heterogeneity within the region:
- Advanced economies in the region are well integrated into global financial markets.
- Most emerging markets in the region exhibit more limited financial integration.
Financial integration within the region is low overall but varies markedly by instrument:
- Intra-regional financial integration is advancing in foreign direct investment (FDI).
- Intra-regional cross-border banking is advancing (from low levels).
- Intra-regional foreign portfolio investment (FPI) has remained limited.
Gravity model results:
- Indicates a significant association between trade and FDI.
- Does not indicate a significant association between trade and FPI.

The paper concludes with policy recommendations to promote resilient financial integration in Asia-Pacific.
(The source states policy recommendations are provided; specific recommendations are contained in the full paper.)