The Financial Market Integration Of China And Singapore(1920-1935)

Foreign exchange market is an important part of financial market,but few researcher would take it as an effective way to study on market integration.This paper,taking Shanghai,Hong Kong as the representatives of China,combines qualitative and quantitative analysis together to explore the integration of the exchange market between China and Singapore,as well as the influence factor.This paper firstly combs the development of each exchange market and foreign trade market in Shanghai,Hong Kong and Singapore,and expounds factors which may influence the integration of exchange market.Then,uses daily exchange time series data from 1920 to 1935,conducts unit root test,co-integration test,granger causality test and Geweke causality decomposition test to explore exchange market relations in bot contemporaneous and long-term aspects.The results indicate that in long-term,Singapore show stable co-movement with Hong Kong and Shanghai,but at the contemporaneous aspect,Hong Kong and Shanghai has the strongest integration than any other pairwise of markets.So we concluded that China and Singapore's exchange market integrated with each other in the long-term to some extent,but inside of China,Hong Kong and Shanghai exists a greater integration,and Singapore also tends to integrate more with countries outside the Southeast Asia.After these,uses instant feedback factors from the Geweke causality test to build up regression model,in order to explore the influence factors that affects the market integration.The regression results show that the ratio of bilateral trade,the gap of inflation and the global economic situation have a significant impact on the linkage relationship between the exchange markets.Finally,the paper puts forward some policy suggestions,which hopes to promote the harmonious development of southeast Asia market.