Assessing financial market integration in Asia - Equity markets

Ip-Wing Yu, Kang-Por Fung and Chi-Sang Tam

Journal of Banking & Finance, 2010, vol. 34, issue 12, 2874-2885

Abstract: Financial integration has strong implications for financial stability. On the one hand, financial integration among economies helps to improve their capacity to absorb shocks and foster development. On the other hand, intensified financial linkages in a world of increasing capital mobility may also harbour the risk of cross-border financial contagion. This paper provides a survey of high-frequency indicators to monitor the development of equity market integration in Asia. The results show that after slowing down between 2002 and 2006, the equity market integration process picked up again in 2007-08. Nevertheless, the process is not complete and the degrees of integration between mature and emerging equity markets are different. The divergence may be attributed to the difference in the political, economic and institutional aspects across jurisdictions in Asia.

Keywords: Financial; integration; Cointegration; Common; component; Synchronisation; Dynamic; correlation (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (129)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:34:y:2010:i:12:p:2874-2885

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