Fators affecting the financial integration process in ASEAN

Abstract

ASEAN Financial Integration since 2015 will facilitate financial service and capital account liberalization, develop capital market and build a common payment system. Success of transnational financial cooperation is determined by a plenty of factors and requires a careful preparation by member countries. This paper analyzes and tests factors affecting the financial integration process in ASEAN such as size, capital control, development level, the development of the financial market, political and investment environment and trade openness. The results from principal components analysis (PCA) indicate that the main determinants to the financial integration in ASEAN include income, political and investment environment, capital control and the development of the financial market