Register  |  Login  |  Inquiries  |  Sitemap |  
Advanced Search
Journal of Economic Integration 2020 March;35(1) :191-213.
Financial Integration and Economic Growth: Should Asia Emulate Europe?

Sonia Kumari Selvarajan 1 and Rossazana Ab-Rahim 2

1University of Malaya, Malaysia
2University Malaysia Sarawak, Malaysia
Corresponding Author: Sonia Kumari Selvarajan ,Tel: 603-79673727, Email:
Copyright ©2020 Journal of Economic Integration
The Asian financial crisis of 1997~1998 was the catalyst for the movement toward regional cooperation between Asian countries, having triggered the common interests and vulnerabilities among the affected nations. As a result, policymakers have resorted to financial integration to unleash their potentials. Nevertheless, this approach is still in its infancy, largely underpinned by the heterogeneity in institutional and structural characteristics of the financial systems between countries. The authorities are cautious, as there is a trade-off between liquidity of capital markets and financial/economic stability. Considering these scenarios, the present study attempts to examine the dynamic relationship between financial integration and growth in Asian regions. Specifically, this study aims to investigate the financial-growth nexus pre-crisis (1980~1995) and post-crisis (1998~2015) as well as throughout the study period (1980~2015). The results of this study show a significant financial-growth relationship pre-crisis, but the impact wanes in the post-crisis and overall time periods. The results indicate to policymakers the heterogeneous characteristics of each country and to what extent financial integration should be emulated from their European counterparts.

JEL Classification
F15: Economic Integration
O47: Measurement of Economic Growth; Aggregate Productivity; Cross Country Output Convergence
C23: Models with Panel Data; Longitudinal Data; Spatial Time Series
Keywords: Financial Integration | Economic Growth | Asia | Europe
Editorial Office
Center for Economic Integration, Sejong University, 209, Neungdong-Ro, Gwangjin-Gu,
Seoul, 05006, Korea
TEL : +82-2-3408-3338    FAX : +82-2-6935-2492   E-mail :,
Browse Articles |  Current Issue |  For Authors and Reviewers |  About
Copyright© by Center for Economic Integration.      Developed in M2PI