Is China or India More Financially Open?

35 Pages Posted: 16 May 2013

See all articles by Guonan Ma

Guonan Ma


Robert N. McCauley

Bank for International Settlements (BIS)

Date Written: April 1, 2013


Measures of de facto capital account openness for China and India raise the question whether the Chinn-Ito measure of de jure capital account openness is useful and whether the Lane-Milesi-Ferretti measure of de facto openness ranks the two countries correctly. We examine eight dimensions of de facto capital account openness. Four measures based on onshore and offshore prices test the law of one price. Among the four quantity measures, we introduce two new ones into the debate: the openness of consolidated banking systems and the internationalisation of currencies. Generally, the measures show both economies becoming more financially open over time. In six of the eight dimensions, the Indian economy appears to be more open financially. Nevertheless, policy continues to segment onshore and offshore markets in both and policymakers face challenges in further financial integration.

Keywords: capital account openness, financial integration, law of one price, foreign exchange market, currency internationalisation, Chinn-Ito, Lane-Milesi-Ferretti

JEL Classification: F23, F31, F36, F65, G15

Suggested Citation

Ma, Guonan and McCauley, Robert N., Is China or India More Financially Open? (April 1, 2013). BIS Working Paper No. 410. Available at SSRN:

Guonan Ma (Contact Author)

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium

Robert N. McCauley

Bank for International Settlements (BIS) ( email )

CH-4002 Basel, Basel-Stadt

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