Is China or India more financially open?
Guonan Ma and
Robert McCauley ()
Journal of International Money and Finance, 2013, vol. 39, issue C, 6-27
Measures of de facto capital account openness for China and India raise the question whether the Chinn-Ito measure of de jure capital account openness is useful and whether the Lane-Milesi-Ferretti measure of de facto openness ranks the two countries correctly. We examine eight dimensions of de facto capital account openness. Four measures based on onshore and offshore prices test the law of one price. Among the four quantity measures, we introduce two new ones into the debate: the openness of consolidated banking systems and the internationalization of currencies. Generally, the measures show both economies becoming more financially open over time. In six of the eight dimensions, the Indian economy appears to be more open financially. Nevertheless, policy continues to segment onshore and offshore markets in both and policymakers face challenges in further financial integration.
Keywords: Capital account openness; Financial integration; Law of one price; Foreign exchange market; Currency internationalization; Chinn-Ito; Lane–Milesi–Ferretti (search for similar items in EconPapers)
JEL-codes: F23 F31 F36 G15 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:39:y:2013:i:c:p:6-27
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