Financial Fragility and Crisis Union in the Asia-Pacific Region

Frank Strobel

Global Economy Journal, 2009, vol. 9, issue 2, 12

Abstract: We examine whether core ASEAN+3 countries might be interested in joining a financial "crisis union," allowing for the role of uncertainty by constructing a stylized real options model of the decision problem involved. We calibrate that model by proxying financial fragility with commonly used bank asset ratios and observe that, according to our criteria, a wider financial crisis union might be more attainable the more encompassing that grouping is; however, our results also reinforce the common perception of pervasive, possibly prohibitive, heterogeneity in these countries' banking and financial systems.

Keywords: financial fragility; crisis union; Asia-Pacific region; real option; calibration (search for similar items in EconPapers)
Date: 2009
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DOI: 10.2202/1524-5861.1460

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