Does financial sector development facilitate in the ASEAN economic community's financial integration?

College

Ramon V. Del Rosario College of Business

Department/Unit

Economics

Document Type

Conference Proceeding

Source Title

2nd International Conference on Business and Economic Development 2018

Publication Date

2-9-2018

Place of Publication

Hanoi, Vietnam

Abstract

The development of the financial services industry is crucial to the harmonious financial integration in East Asia. The ASEAN region is a host of member states with different levels of financial and economic developments. This study determines the level of development of the financial services sector among the ASEAN5 member states from 2002 to 2013 and explores the opportunities where financial integration may be undertaken in the light of the establishment of the ASEAN Economic Community in 2015. Member states exhibited high economic growth levels since the Asian Financial Crisis, which was spurred by the heightened competitiveness in the region brought about by the increase in inter- and intra-regional trade, investments and production network. It was found that there is high intermediation in the financial system and majority of the ASEAN5. Member States still empty the bank-based financial system compared to non-banks and financial markets. The region will slowly shift from bank-based to market-based system, as changes in the financial architecture will become increasingly evident in the near future to enable smooth transition of the region into an economically integrated region. Financial supervisors are faced with the challenges of providing sound financial environment, strong supervisory/regulatory framework and better institutional arrangements to stimulate further development of the financial services industry. Advanced economies will lead the region in increasing depth, in promoting financial soundness and in deepening collaboration among member states where reform priorities and financial convergence are crucial.

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Disciplines

Finance | Regional Economics

Keywords

Financial services industry—Southeast Asia; Southeast Asia—Economic integration

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