What Hinders Cross-Border Portfolio Investment in East Asia?

Park, Daekeun; Shin, Inseok

doi:10.1142/s0217590813500124

Cited by 3 publications

(3 citation statements)

References 17 publications

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“…п.). При соответствующем подборе параметров данная модель используется для описания потоков капитала (Park, Shin, 2013). В данном исследовании кроме классических факторов модели, таких как объемы ВВП, площадь территории, расстояние и наличие общей границы, используются также режимы валютных курсов, уровень процентных ставок и финансового развития исследуемых стран.…”

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Cross-Border Capital Flows in East Asia: Impact of Monetary Policy Measures

Dyomina¹

2019

Spatial Economics

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Despite the ASEAN Community Vision 2025 plans to deepen and develop monetary and financial cooperation within member states, regional markets differ significantly from each other in the level of development and overregulation. Among ASEAN-5 countries, Singapore has the most developed and large financial market with the least number of applied restrictions. The remaining countries (Malaysia, the Philippines, Indonesia and Thailand) control virtually all capital account transactions. The examined five countries practice soft peg exchange rate regimes: a stabilized arrangement and a floating. Indonesia and Singapore apply a stabilized arrangement, and Malaysia, Thailand and the Philippines apply a floating. The regression analysis results show that changing exchange rate regimes of ASEAN-5 countries to a hard peg (a single currency basket) will have a significant effect on the volume of issued bonds in four of the five studied countries (all except Thailand). Indonesia will have the greatest effect of the exchange rate regime change. Thus, revaluation of the value of the East Asian currencies basket against USD by 1% will reduce the volume of issued bonds in Indonesia by 3.79%, and devaluation, on the contrary, will increase by the same amount. Consequently, Indonesia and other countries under study will have to continue the competitive devaluation policy against USD in order to have a positive effect of changing exchange rate regime. But in this case it will be a coordinated devaluation of all East Asian currencies and not a currency war. It is worth noting that the correlation between the volumes of bonds issued in national and foreign currencies in all the studied countries and fluctuations of East Asian currencies against each other and to USD is much weaker than the effect of the single currency basket. And in the case of the Philippines this correlation is not at all.

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Cross-Border Capital Flows in East Asia: Impact of Monetary Policy Measures

Dyomina¹

2019

Spatial Economics

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“…The sizes of foreign direct investment (FDI), foreign portfolio investment (FPI), and international bank claim are only 51, 29, and 17 percent of GDP respectively, which are smaller than one fourth of the numbers in industrial economies. Possible causes of low financial integration are capital flow restriction, information costs, and transaction costs (Auster & Foo, 2015;Ma, 2016;D. Park & Shin, 2013;Pongsaparn & Unteroberdoerster, 2011).…”

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confidence: 99%

“…Possible reasons that EMEs have evidently lower level of international FI are capital flow restriction and cross-border regulation that are still in place for some economies (Pongsaparn & Unteroberdoerster, 2011), information cost associated with investing in foreign markets (Auster & Foo, 2015), and transaction costs due to inefficient trading infrastructure (Auster & Foo, 2015;Ma, 2016;D. Park & Shin, 2013).…”

Section: Fi In Advanced and Emerging Economiesmentioning

confidence: 99%

Financial and trade integrations on international business cycle under market imperfection and heterogeneous agents

Ratanavararak

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This thesis studies the effect of financial integration (FI) together with trade integration (TI) on international business cycles and different types of market participants in emerging markets under the presence of financial frictions and imperfect access to finance. The study adopted dynamic stochastic general equilibrium (DSGE) framework and developed three international real business cycle (RBC) models to examine FI from various aspects. The simulation results show that the effect of FI on macroeconomic volatility and business cycle synchronization is mixed likely depending on TI, types of financial flow, severity of market frictions, and financial accessibility. Consumption smoothing benefit and welfare gain from higher FI are small or absent when market imperfection exists. People with more financial restrictions and no unconstrained domestic markets to rely on tend to be more negatively affected by increasing FI. TI generally lowers output and consumption fluctuation, increases business cycle synchronization, and slightly enhances welfare. Some evidences suggest that the impact of FI is weakened under higher trade possibly because FI and TI affect business cycles in opposite directions and their impacts might offset each other. Overall, there is a trade-off among diverse impacts of FI and greater FI is not entirely beneficial. Medium amount of FI combined with high trade tends to yield more desirable outcomes. The implication is that integrated policies are preferable. FI should be considered together with enhancing TI, reducing asymmetric frictions, improving unequal financial access, and advancing financial development. Deepening integration in both markets may be more favorable to business cycles than focusing at only FI. Everyone should be able to access and utilize saving, investment and borrowing opportunities. Moreover, a sound domestic financial market is an important support when FI is imperfect.

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Banks and the World’s Major Banking Centers, 2010

2016

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We update three earlier articles on the determinants of interpenetration of financial centers by banks by adding the year 2010 to our analyses for 1970 and 1980, 1990, and 2000. In addition, we also re-estimate our model to include data for Beijing/Shanghai, and add those emerging centers for 2010. First, the number of banks in our data and the number of their offices in other centers has fallen by 46 % and 24 % since peaking in 1990. Second, even so our matrix saw less turbulence than in the prior two decades as density and number of presences in other centers per bank increased. Third, London had regained the first place from New York. Tokyo remains in fifth place after Hong Kong and Singapore. Once one includes Beijing/Shanghai, the Chinese centers now rank first and Tokyo sixth. Fourth, Paris and Frankfurt/Hamburg have regained some centrality. Fifth, our gravity model approach continues to model the data well, with distance between centers continuing to depress interpenetration between centers as it did in 2000. Lastly, the primary effect of introducing Beijing/Shanghai as a center has increased the importance of interpenetration as banks from Beijing and Shanghai are going to centers from which banks are coming to Beijing and Shanghai.

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What Hinders Cross-Border Portfolio Investment in East Asia?

Cited by 3 publications

References 17 publications

Cross-Border Capital Flows in East Asia: Impact of Monetary Policy Measures

Cross-Border Capital Flows in East Asia: Impact of Monetary Policy Measures

Financial and trade integrations on international business cycle under market imperfection and heterogeneous agents

Banks and the World’s Major Banking Centers, 2010

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