The Changing Network of Financial Market Linkages: The Asian Experience

50 Pages Posted: 22 Feb 2019

See all articles by Biplob Chowdhury

Biplob Chowdhury

University of Tasmania

Mardi H. Dungey

University of Tasmania (deceased); Financial Research Network (FIRN) (deceased)

Moses Kangogo

University of Tasmania

Mohammad Abu Sayeed

University of Tasmania, Tasmanian School of Business and Economics, Students

Vladimir Volkov

University of Tasmania

Date Written: September 19, 2018

Abstract

Recent international financial crises highlight the advantages of understanding the global financial system as a network of economies in which cross-border financial linkages are fundamental to the spread of systemic risk. We investigate the changing network of financial markets for six periods from 1995–2016, constructing a network that captures the concepts of the direction of links between markets, the significance of these links, and their strength. Emphasis is placed on the transition of the networks before and after the Asian financial crisis of 1997–1998 and the global financial crisis of 2008–2009. The analysis demonstrates the increase in interconnectedness during periods of stress and the fall in the number of links in post-crisis periods. At the same time, the results reveal a general deepening of the connections of the Asian market with the rest of the world over the past 2 decades. They also suggest that many of these markets have transitioned from being primarily linked to developed non-Asian markets through key bridge markets (such as Hong Kong, China) to developing stronger direct links with these external markets, highlighting the importance of key geographical nodes in market development.

Keywords: Asian markets, financial crises, network

JEL Classification: G01, G10, G15

Suggested Citation

Chowdhury, Biplob and Dungey, Mardi H. and Kangogo, Moses and Sayeed, Mohammad Abu and Volkov, Vladimir, The Changing Network of Financial Market Linkages: The Asian Experience (September 19, 2018). Asian Development Bank Economics Working Paper Series No. 558 (September, 2018). Available at SSRN: https://ssrn.com/abstract=3339132 or http://dx.doi.org/10.2139/ssrn.3339132

Biplob Chowdhury (Contact Author)

University of Tasmania ( email )

French Street
Sandy Bay
Tasmania, 7250
Australia

Mardi H. Dungey

University of Tasmania (deceased)

Financial Research Network (FIRN) (deceased)

Moses Kangogo

University of Tasmania

French Street
Sandy Bay
Tasmania, 7250
Australia

Mohammad Abu Sayeed

University of Tasmania, Tasmanian School of Business and Economics, Students ( email )

Hobart
Australia

Vladimir Volkov

University of Tasmania ( email )

French Street
Sandy Bay
Tasmania, 7250
Australia

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
15
Abstract Views
177
PlumX Metrics