Financial Integration in the Asia-Pacific Deepening economic ties between Australia and Asia will also lead to deeper financial ties.
What this report finds, however, is that many of the enablers and impediments to this shift, or their potential
impact, are not well-researched or understood. Our review suggests that policymakers, regulators and
practitioners lack a strong evidence base from which to make well-informed strategic decisions on matters
of significance to the entire Australian economy.
In fact, we find the benefits and costs of financial integration receive only limited attention in the academic
literature — particularly compared with the substantial body of work documenting the benefits and costs
of merchandise trade integration. There is a paucity of standardised data and analysis of trade in financial
services. Integration, as measured by financial flows, has been extensively analysed in the United States and
the common market of the EU, but the identification of enablers and barriers to cross-border flows — as
well as best practice regulatory, taxation, and legal frameworks to maintain financial stability — is only now
starting to be applied to the rapidly-growing markets of the Asia-Pacific.
However, many of the enablers and impediments to this shift, or their potential impact,
are not well-researched or understood.
This report puts forward the case for research to illuminate both the current degree of regional financial
integration and the scope for its future. The limitations of the data and of high-quality analysis and debate
on this issue are documented here. The questions raised in this report necessitate a deeper understanding
of what the Asia-Pacific region’s rise will mean for Australia.
Accordingly, this report lays the groundwork for an Australian Centre for Financial Studies (ACFS) research
program titled Integration in the Asia-Pacific: The Future of Australian Financial Services.