Financial Integration and Economic Growth: Should Asia Emulate Europe?

Selvarajan, Sonia Kumari and Ab-Rahim, Rossazana (2020) Financial Integration and Economic Growth: Should Asia Emulate Europe? Journal of Economic Integration, 35 (1). pp. 191-213. ISSN 1225-651X

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Official URL: https://doi.org/10.11130/jei.2020.35.1.191

Abstract

The Asian financial crisis of 1997~1998 was the catalyst for the movement toward regional cooperation between Asian countries, having triggered the common interests and vulnerabilities among the affected nations. As a result, policymakers have resorted to financial integration to unleash their potentials. Nevertheless, this approach is still in its infancy, largely underpinned by the heterogeneity in institutional and structural characteristics of the financial systems between countries. The authorities are cautious, as there is a trade-off between liquidity of capital markets and financial/economic stability. Considering these scenarios, the present study attempts to examine the dynamic relationship between financial integration and growth in Asian regions. Specifically, this study aims to investigate the financial-growth nexus pre-crisis (1980~1995) and post-crisis (1998~2015) as well as throughout the study period (1980~2015). The results of this study show a significant financial-growth relationship pre-crisis, but the impact wanes in the post-crisis and overall time periods. The results indicate to policymakers the heterogeneous characteristics of each country and to what extent financial integration should be emulated from their European counterparts. © 2020-Center for Economic Integration, Sejong Institution, Sejong University, All Rights Reserved.

Item Type: Article
Uncontrolled Keywords: Asia; Economic growth; Europe; Financial integration
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Economics & Administration
Depositing User: Ms. Juhaida Abd Rahim
Date Deposited: 24 Jun 2020 05:03
Last Modified: 24 Jun 2020 05:03
URI: http://eprints.um.edu.my/id/eprint/24982

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