Measuring the Financial Integration of East Asia - Viewpoint from the Risk Sharing

Financial integration offers the opportunity for domestic agents to share idiosyncratic risks from their home country by holding foreign assets. With the development of E-finance, it becomes much easier to purchase and hold foreign financial assest to facilitate the risk sharing. From the viewpoint of risk sharing, this paper measures the degree of financial integration in East Asia empirically. The result shows that East Asian economies are far away from perfect risk sharing. Then this paper tries to analyze the reasons for imperfect risk sharing in East Asia from different aspects.