Lessons for China from financial liberalization in Scandinavia

This study brings out policy lessons for China today, a financially repressed country, from the financial liberalization process in Denmakr, Finland, Norway and Sweden in the 1980s and early 1990s. This report identifies a set of policy lessons for China today from the experience of financial deregulation, financial crisis and recovery in Scandinavia during the period 1985-2000. Although there are considerable differences between the huge Chinese economy and the small Nordic countries, there are enough similarities to make lesson-drawing a worthwhile exercise. Based on the Scandinavian experience and the added complexity of China's status as a transition economy, financial reforms should strike a proper balance between being gradual (to avoid costly mistakes) and substantive (to secure efficiency gains in the longer term) with due consideration being given to initial conditions concerning regulation, taxes and exchange rate arrangements. A well managed process of financial deregulation requires that policy-makers and market participants fully understand the interlinkages between financial reforms and the rest of the economy. In addition, the supervisory and management systems in the financial sector should move in step with the liberalization process.Financial liberalization,financial crisis,transition,financial regulation,banking,boom-bust,China,Scandinavia,the Nordics

Banking Reform in the Lower Mekong Countries

This paper reviews recent banking reform efforts in the lower Mekong countries (LMCs), comprising Cambodia, the Lao People's Democratic Republic, and Vietnam. Linked by close economic and cultural ties, the three LMCs face the dual challenge of economic development and transition to market-based economies. Two-tier banking systems were formally introduced in the late 1980s. However, state-owned banks with weak balance sheets continue to dominate the banking systems of Vietnam and Lao P.D.R. Cambodia's main challenge is to reconstruct a banking system after decades of civil strife. Based on progress made and brief cross-country comparisons, the paper identifies key challenges and options for further reform.

Hong Kong SAR As a Financial Center for Asia

We document Hong Kong SAR''s evolving role as an international financial center in the Asia region, the importance of the growing special link with China as well as supply-side advantages, and outline the scope for future financial services growth. Hong Kong SAR has a long established track record as Asia''s premier center for cross-border financial transactions. Further financial opening of China is likely to consolidate Hong Kong SAR''s leading position as Asia''s international financial center over the medium term. However, preserving Hong Kong SAR''s first-mover advantage in the long-term calls for a development strategy that balances reaping the benefits from the special China role with the need to transcend into a truly international center in the long run.Financial sector;Banking;Foreign direct investment;fdi, portfolio investment, international financial, capital flows, international financial center, direct investment, financial integration, portfolio investments, global capital, global financial centers, international financial centers, international finance, financial markets, global finance, international financial markets, international financial centre, foreign affiliate, equity flows, international settlements, global financial services

Financial Integration and Rebalancing in Asia

The paper shows that Asia''s degree of financial integration, both with the world and within the region remains low by various measures. The paper also provides empirical evidence that greater financial integration can support economic rebalancing in statistically meaningful ways. The implication is that in the debate on managing capital inflows the longer-term benefits of financial openness for broader-based growth should not be forgotten.Asia;Capital inflows;Foreign investment;Exchange restrictions;Capital account liberalization;Economic growth;financial integration, portfolio investment, fdi, direct investment, portfolio investment assets, foreign assets, net foreign assets, direct investment inflows, foreign direct investment, international financial, trade intensity, trade integration, international financial integration, financial markets, international settlements, foreign investors, foreign participation, capital flows, equity portfolio investment, foreign asset, global integration, globalization, global financial integration, equity portfolio, exchange rates, foreign currency, international economic policy, financial regulations, equity flows, financial globalization, international financial statistics, global finance, bilateral trade, global financial crisis, economic integration, international investors, medium-sized firms, globalization of production, international financial centers

Hong Kong SAR Economic Integration with the Pearl River Delta

Hong Kong SAR''s economic integration with the Mainland has primarily taken place in the Pearl River Delta (PRD). Taking stock of integration trends, this paper discusses key implications for ensuring economic benefits of further integration are sustained and associated costs minimized. Besides further investments in infrastructure, Hong Kong SAR''s role as a producers services and finance hub will depend on frictionless movements of goods, services, people and know-how, requiring policy coordination to further promote trade and investment and developing a common human skills base with the PRD. Regional cooperation will also be needed to minimize the costs of rising levels of cross-border pollution.Trade;Financial sector;Trade integration;Investment policy;Infrastructure;Services sector;Human capital;fdi, direct investment, foreign direct investment, economic integration, producer services, supply chain, common market, global supply, trade links, skilled labor, multinational companies, trade flows, export performance, supply chain management, foreign investment, per capita income, free trade agreement, network externalities, trade regime, metal products, overseas investors, inward foreign direct investment, trade agreement, aggregate trade, free flow, foreign banks, bilateral trade, world market, foreign invested enterprises, transport equipment, trade fair, market access, multinational firms, preferential market access, trade pattern, environmental regulation, import side, aggregate trade flows, competitive disadvantage, foreign companies, free trade

What's Driving Private Investment in Malaysia? Aggregate Trends and Firm-Level Evidence

Private sector investment has been a key source of growth in Malaysia over the last three decades, but after an unprecedented decline in the wake of the Asian crisis it has remained sluggish in recent years. Using aggregate and firm-level data, this paper aims to explain these trends and their implications for Malaysia''s investment and growth outlook. Aggregate data point to sustained overinvestment in the years prior to the Asian crisis and the role of shifts in investor perceptions as important determinants of the recent decline in private investment. Meanwhile, firm-level data suggest that low profitability, along with financing constraints affecting smaller firms and those in the services sector, has also been important.Private investment;Economic growth;capital formation, fixed capital, cost of capital, investment behavior, investment decisions, public investment, capital markets, investment projects, fixed assets, capital stock, capital market, gross fixed capital formation, capital goods, direct investment, foreign direct investment, imperfect capital markets, external financing, stock market, investment climate, investment growth, private capital, stock market capitalization, capital market imperfections, capital accumulation, investors, consumer price index, government bonds, business investment, equity ratio, interest rate ceilings, investment operations, investment risk