The international financial integration of China and India

Philip Lane and Sergio Schmukler

No 4132, Policy Research Working Paper Series from The World Bank

Abstract: Three main features characterize the international financial integration of China and India. First, while only having a small global share of privately-held external assets and liabilities (with the exception of China's foreign direct investment liabilities), these countries are large holders of official reserves. Second, their international balance sheets are highly asymmetric: both are"short equity, long debt."Third, China and India have improved their net external positions over the past decade although, based on their income level, neoclassical models would predict them to be net borrowers. Domestic financial developments and policies seem essential in understanding these patterns of integration. These include financial liberalization and exchange rate policies, domestic financial sector policies, and the impact of financial reform on savings and investment rates. Changes in these factors will affect the international financial integration of China and India (through shifts in capital flows and asset and liability holdings) and, consequently, the international financial system.

Keywords: Investment and Investment Climate; Economic Theory&Research; Banks&Banking Reform; Capital Flows; Financial Economics (search for similar items in EconPapers)
Date: 2007-02-01
New Economics Papers: this item is included in nep-cna, nep-cwa, nep-dev, nep-ifn and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/wps4132.pdf (application/pdf)

Related works:
Journal Article: The international financial integration of China and India (2006)
Working Paper: The International Financial Integration of China and India (2006)
Working Paper: The International Financial Integration of China and India (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:4132

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().