Jump to ContentJump to Main Navigation
International FinanceA Survey$
Users without a subscription are not able to see the full content.

H. Kent Baker and Leigh A. Riddick

Print publication date: 2012

Print ISBN-13: 9780199754656

Published to Oxford Scholarship Online: May 2013

DOI: 10.1093/acprof:oso/9780199754656.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a monograph in OSO for personal use (for details see www.oxfordscholarship.com/page/privacy-policy).date: 21 October 2018

International Financial Integration: Benefits, Costs, and Policy Challenges

International Financial Integration: Benefits, Costs, and Policy Challenges

Chapter:
(p.110) 6 International Financial Integration: Benefits, Costs, and Policy Challenges
Source:
International Finance
Author(s):

PIERRE-RICHARD AGÉNOR

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199754656.003.0006

This chapter reviews the recent analytical and empirical literature on the benefits and costs of international financial integration and the policy challenges that it creates. The chapter also discusses the impact of financial openness and capital flows on consumption, investment, and growth, as well as the impact of foreign bank entry on the domestic financial system. The argument is made that, for small open developing countries, the benefits of financial integration are mostly long term in nature, whereas risks can be significant in the short run. Careful preparation and management—notably by strengthening bank regulation and supervision and by adopting a more flexible monetary policy framework, possibly supplemented by countercyclical regulatory rules and temporary controls on short-term capital flows—are therefore essential. Cross-border regulation of systemically important financial institutions is also required to mitigate the impact of destabilizing capital flows, but care is needed in imposing micro-based prudential rules to avoid unintended general equilibrium consequences.

Keywords:   financial integration, capital flows, contagion, capital controls

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .