An Investigation into the Financial Robustness of Asia (original) (raw)
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Comparative Financial Development in Asia-Pacific Since the Asia Crisis
Handbook of Asian Finance, 2014
Prior to 1997, economic growth in Asia was due in part to the late adoption of developing technologies, in addition to relative cheap labor. Countries, such as Malaysia, Thailand, and South Korea, were touted as "Asian Tigers" with huge development potential. They benefited considerably from Japan's efforts to move production to countries with lower costs. The decision to retain pegged or otherwise fixed exchange rates, however, eventually caused much of Asia's market-based systems to falter in the 1990s, and the devaluation of the Baht in Thailand on 2 July 1997 is often viewed as the start of the Asian financial crisis. Given the prior stability in exchange rates, countries such as Indonesia and Thailand had borrowed overseas, often short term, in foreign currency positions that were unhedged. The IMF, World Bank, and Asian Development Bank assisted Asian governments in their recovery efforts. The aim of course was to prevent any future occurrences, so reform of Asia's financial systems appeared a necessity to stabilize markets. In this chapter we investigate the recovery process given it appears the Asian region has better survived the 2007 global financial and European debt crises than many other regions both developed and developing. The irony of this situation is of course what followed in 2007-2010 with the global and European global crises. While developed nations faced volatile markets, one of the biggest areas of concern for the Asian region were initially inflationary pressures, followed with some contractions especially by developed nation investors (felt greatest in China, Taiwan, Korea, and Malaysia), falling stock markets and trade flows, but with much milder financial impacts than in developed markets (Filardo et al., 2010). This study uses a sample of 10 large economies in the Asia-Pacific region. It provides the basis for intra-regional analysis and should facilitate the identification of those financial sector features relevant for economic development. These economies include China,
Financial Development in the Asia-Pacific Region
SSRN Electronic Journal, 2000
Since the 1997 financial crisis many East Asian economies have attempted to realign their financial systems to prevent future crises and provide financial mechanisms for sustainable long-term development. This paper examines the financial system development of select Asia-Pacific countries before, during and immediately after the crisis. The relative positioning of corporate borrowers is also examined. Surprisingly, despite the range of reforms, the region's financial development position has generally suffered a slight decline. Corporate sector development has generally improved, except in Japan, where significant government issues, in domestic markets, appear to have crowded-out the corporate investment market.
Financial Development in Asia: Beyond Aggregate Indicators
The World Bank eBooks, 2014
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
2015
Recognizing the increasingly important role finance will play in Asia, the International Monetary Fund (IMF) embarked on the "Future of Asia's Finance" project in early 2013. Our aim was to take stock of Asia's financial systems and chart possible paths that it might take to meet the rising economic expectations of its vast population and finance its increasingly consumption-based growth models. The IMF is committed to playing a supportive role in helping its Asian member countries achieve the twin goals of inclusive growth and financial stability. These goals need to be considered in the context of major ongoing changes in the global financial system following the global financial crisis in 2008, as well as demographic shifts, rapid urbanization, large infrastructure needs, and the evolving structure of economic activity in Asia itself. Asia demonstrated remarkable resilience throughout the global financial crisis and its aftermath. Although some export-dependent economies were hit hard, the region as a whole recovered quickly and reestablished itself as the global growth leader. One key reason for Asia's resilience was that the region's financial sector was in much better shape than many countries in the West, a sharp contrast to the experience during the Asian financial crisis in the second half of the 1990s. Looking ahead, Asia's relatively conservative business model, a strength going into the global financial crisis, may become a constraint if it holds back further development of the financial sector, such as equity and bond markets and long-term investor bases, that are needed for continued strong growth. Although Asia's financial sector has been successful in supporting growth, sustaining the region's impressive growth momentum will require the financial sector to innovate further. There is tremendous potential to better manage and mobilize Asia's large savings to finance the region's human capital and infrastructure investment needs. Capital markets need to deepen further to strengthen financial intermediation and risk sharing, diversify sources of funding, and mitigate capital flow volatility. By moving in this direction, the financial sector will help Asia meet the challenges of population aging, reduce gaps between the rich and the poor, and escape the so-called middle-income trap. Given the growing size and influence of the Asian economies, a sound and dynamic financial sector in Asia will also be beneficial to the rest of the world. So far the IMF's work on the "Future of Asia's Finance" project has focused on taking stock of Asian financial systems and their resilience to global stresses, as well as how they can be retooled to address demographic shifts and infrastructure needs and adapt to the new global regulatory regime. In this context, we have held several public events in the past two years. v ©International Monetary Fund. Not for Redistribution vi Foreword • "The Future of Asia's Finance" seminar during the April 2013 IMF-World Bank Spring Meetings outlined the challenges facing Asia's financial sectors and provided a starting point for many of the topics in this book. • The Joint IMF-Hong Kong Monetary Authority (HKMA) Conference, "The Future of Asia's Finance," held in February 2014, brought together government, private sector, think tank, and other representatives from the region to discuss the role of finance in Asia, including managing capital flows and dealing with regulatory reforms. • At the October 2014 IMF-World Bank Annual Meetings Flagship Seminar, "Financing Asia's New Growth Models," a high-level panel discussed how to ensure sustainable, high-quality growth in Asia and how financial systems should respond to these challenges. Drawing on the lessons from our previous and ongoing work, including the key takeaways from the seminars noted above, this book attempts to provide a comprehensive assessment of the state of Asia's financial sector, the challenges going forward, and further changes that can be expected. It also proposes policy responses to address the region's present and future challenges. Lessons learned from crosscountry experiences are valuable and yet they need to be applied to Asia with care, recognizing the region's many unique characteristics and the wide diversity of financial systems within the region. Through the "Future of Asia's Finance" project, the IMF intends to continue serving as an international forum for its Asian members for discussing the challenges faced by its financial systems to meet Asia's twin goals of sustaining high growth and financial stability.
East Asian Financial and Economic Development
This working paper is intended for the Handbook of Finance and Development. We are grateful to the editors, Thorsten Beck and Ross Levine for helpful comments and suggestions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
Financial Development and Economic Growth in Developing Asia
SSRN Electronic Journal, 2010
The ADB Economics Working Paper Series is a forum for stimulating discussion and eliciting feedback on ongoing and recently completed research and policy studies undertaken by the Asian Development Bank (ADB) staff, consultants, or resource persons. The series deals with key economic and development problems, particularly those facing the Asia and Pacific region; as well as conceptual, analytical, or methodological issues relating to project/program economic analysis, and statistical data and measurement. The series aims to enhance the knowledge on Asia's development and policy challenges; strengthen analytical rigor and quality of ADB's country partnership strategies, and its subregional and country operations; and improve the quality and availability of statistical data and development indicators for monitoring development effectiveness. The ADB Economics Working Paper Series is a quick-disseminating, informal publication whose titles could subsequently be revised for publication as articles in professional journals or chapters in books. The series is maintained by the Economics and Research Department.
The Global Financial Crisis and East Asia: Testing the Regional Financial Architecture
2009
The East Asia Institute(EAI) is a nonprofit and independent research organization in Korea, founded in May 2002. The EAI strives to transform East Asia into a society of nations based on liberal democracy, market economy, open society, and peace. The EAI takes no institutional position on policy issues and has no affiliation with the Korean government. All statements of fact and expressions of opinion contained in its publications are the sole responsibility of the author or authors. is a registered trademark. © Copyright 2009 EAI This electronic publication of EAI intellectual property is provided for non-commercial use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of EAI documents to a non-EAI website is prohibited. EAI documents are protected under copyright law.
EconoQuantum, 2005
The 997 Asian crisis was a rude awakening for the hitherto complacent East Asian countries. Slowly but steadily, a region-wide consensus has been emerging that the East Asian (ea, henceforth) countries need to collectively oversee regional economic issues in a coordinated way or to move a step up for concrete regional arrangements to forestall the outbreak of future financial crises. Before then, the prevailing concerns for many ea countries were with overseas markets outside the region. The export-oriented drive had worked well as the main contributing factor for the region's spectacular economic growth. Amidst the Asian crisis, Japan attempted the first initiative to develop intra-regional measures for circumventing future financial crisis. Its ambitious proposal was to create an Asian Monetary Fund (aMF), which would be equivalent to a region-based iMF. The Japanese proposal included such a significant sum of facility that crisis-hit countries welcomed it and even envisioned a long-term regional goal of creating a more ambitious, alternative Asian Monetary Union (aMu, henceforth), which would be modeled after the European Monetary Union (eMu).. This paper is updated and extended from an earlier version presented at a Korean Institute of finance workshop in Seoul. The authors appreciate many helpful comments received during the workshop.
The 1990s have been years of activism. The developed countries and most international financial organizations have been urging the developing countries to undertake rapid and comprehensive domestic and external financial liberalization. The crises that followed have now instilled a dose of caution. Liberalization is a risky step, one on which knowledge remains rudimentary. It concerns many different aspects. There is no urgency to undertake liberalization, and when it is taken, it should be approached as a delicate step calling for cautious policy reactions. The main focus of this paper is a survey of the modern theoretical and empirical literature on the topic of a financial sector reform in East Asian region. The paper is organized as following. Section 2 is devoted to financial liberalization as a main part of financial reforms, existing approaches for its implementation and potential positive or/and negative results of it. Section 3 is about financial reforms in East Asia. Section 4 offers some lessons from financial liberalization.