Impact of the Global Financial Crisis on the Degree of Financial Integration among East Asian Countries

Abstract

This paper aims to gauge the impact of the global financial crisis on bilateral holdings of financial assets among East Asian countries. For this purpose, this paper uses the International Monetary Fund's Coordinated Portfolio Investment Survey (CPIS) data. We first present information about financial linkages between the CPIS-participating eight East Asian economies and other East Asian economies before and after the global financial crisis of 2008. We then apply the gravity model to assess the determinants of the cross-border holdings of foreign securities for four major East Asian financial investors – Hong Kong, Japan, Korea and Singapore. We find only few changes in the bilateral holdings of financial assets among East Asian countries in the post-crisis period. In particular, our evidence does not indicate that intra-Asian financial integration has increased noticeably since the global crisis.