Studies On The Effect Of Financial Integration On The Economic Growth In East Asia

After the1997Asia financial crisis,countries in East Asia start to realize theinterest and exchange rate liberalization,develop financial market and enhanceregional and international cooperation.On one hand they tried their best to developtheir financial market,enhance cooperation with each other;On the other hand,theyopen their financial market to the outer world and call off restrictions in the capitalaccount in order to realize financial liberation.As a result,the conomies in EastAsia are more integrated with other economies.The article firstly mesures the financial integration with the restriction methodand the amount method.We find that the integration in the region is going deeper anddeeper.Then we break our samples into HFI group(High integrated economies) andLFI group(less integrated economies) and study the relationship between economicgrowth and financial integration.We find that the more integrated the countries,Themore benefitful to the region.But whether the effect of financial integration ischanging with time or not?To deal with this problem,we break the time series intotwo stage:II(the period after the year1997) and I(the period before the year1997).Theresearch shows that the effect of integration on economy is changing.We find duringperiod II,the financial integration is positive or less negative to economicgrowth,while during the period I it is more negative.In literatures which arestudying the theme,they found there were many conditions that affect the relationshipbetween growth and integration.In our researchs,we find that internationaltrade,financial deepening and macroeconomic policy will affect it,and also we findthat there are stnergistic effect between financial integration and financial deepeningor trade openness and fiscal policy.Check the results,we propose that countries in the region should keepcoorperation,open-up and Enhance international trade between each other,at the sametime they should enhance maocroeconomic policy coordination.