Singapore: Selected Issues

International Monetary Fund

No 2025/193, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper takes a stock of the current state of financial interconnectedness in Asia and through Singapore, and explores the link between trade and financial flows. One of the findings highlight that those Asian economies are not as financially integrated as their integration in trade would suggest and that Asia’s financial integration with the rest of the world has been led by advanced economies in the region, including Singapore. The foreign direct investment (FDI) network closely resembles the trade network and stands in contrast with the network for portfolio assets, which is dominated by advanced economies. Analysis based on a gravity model confirms that countries with strong prior trade linkages are likely to see higher FDI flows but finds no such relationship for portfolio flows. As Singapore continues to play a significant role in advancing financial integration in Asia, Singaporean banks are exposed to cross-border and foreign exchange funding risks. The authorities continue to make efforts to mitigate these risks.

Keywords: INTERCONNECTEDNESS in Asia; C. network analysis; FDI network; portfolio assets; loan portfolio; FDI flow; portfolio investment network; FX liquidity management; banking sector assets; Foreign direct investment; Financial integration; Commercial banks; Trade balance; Portfolio investment; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 16
Date: 2025-07-16
New Economics Papers: this item is included in nep-fdg and nep-sea
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