Going Regional: How to Deepen ASEAN's Financial Markets

Date: January 2012
Type: Papers and Briefs
Country:
Subject:
Series: Economics Working Papers
ISSN: 1655-5252 (print)
Author: Gochoco-Bautista, Maria Socorro; Remolona, Eli M.

Description

This study identifies the key issues involved in the further development and deepening of financial markets in the Association of Southeast Asian Nations (ASEAN). For the smaller ASEAN countries, the first priority is the development of the banking system. In the larger ASEAN+3 economies, banking systems are already reasonably well-developed, while stock markets and government bond markets have evidently achieved critical mass even while remaining purely domestic markets. The tug-of-war between the geography of information in the direction of more localized markets versus the critical mass required by network externalities makes the case for regional integration stronger for corporate bond markets than for other financial markets. The study proposes three bold initiatives to develop a deep and liquid regional corporate bond market.

Contents

  • Introduction
  • The Recycling of Savings
  • The Downside of Capital Mobility
  • The Role of Capital Controls
  • Financial Market Development in ASEAN Countries
  • Why Regional Instead of Global? The Tug-of-War between the Geography of Information and Network  Externalities
  • The Way Forward