Financial Integration in Asia: Estimating the Risk-Sharing Gains for Australia and Other Nations

December 1, 2006

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Holding foreign assets reduces the volatility of a country's income by allowing countries to share risk. Yet, financial integration is limited in Asia. This paper estimates how much Australia and other countries in the Asia-Pacific region would gain from greater financial integration. The results suggest that these welfare gains are large, which argues in favor of a progressive capital account liberalization across the region.

Subject: Capital account, Consumption, Financial integration, Foreign assets, Stocks

Keywords: gain, investor, welfare gain, WP

Pages:
20
Volume:
2006
DOI:
https://doi.org/10.5089/9781451865271.001
Issue:
267
Series:
Working Paper No. 2006/267
Stock No:
WPIEA2006267
ISBN:
9781451865271
ISSN:
1018-5941

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