Financing investment in East Asia: Regional or global savings? ¬リニ

This paper investigates the extent to which domestic investment in East Asian countries is financed by domestic, (East Asian) regional and global savings in order to infer the relative importance of regional vs. global capital markets in East Asia. Panel regression results show that regional saving in East Asia plays a much more important role than global saving in financing investment in the region. The results suggest that global capital flows, despite its huge volume in East Asia, does not contribute to proper investment financing. The results also show that Japanese saving has significant effects on regional investment but Chinese saving does not. 2014 Elsevier B.V. All rights reserved. § This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-200-20130053). * Corresponding author. Tel.: +82 2 760 0421. E-mail addresses: [email protected] (S. Kim), [email protected] (S.H. Kim), [email protected] (Y. Choi). 1 See, for example, Kim et al. (2007a). 2 There have been several important regional initiatives, such as the ASEAN Surveillance Process, the Chiang Mai Initiative, the Asian Bond Markets Initiative, and Asian Bond Fund. 3 Eichengreen and Park (2004) and Kim et al. (2007b) document that financial market integration within East Asian countries has been far slower than financial market integration between East Asia and advanced countries. 4 We examined the same issue with different data and methodology in Kim et al. (2011). 5 For example, see Murphy (1984), Obstfeld (1986, 1995), Bayoumi (1989), Kim (2001), Kim et al. (2007a), and Guillaumin (2009).