References The Internationalization of Financial Services in Asia. Policy Research Working Paper Washington. DC: World Bank.

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1 References Arner, D.W., C. D. Booth, B.F.C. Hsu, P. Lejot, Q. Liu, and F. Pretorius Property Rights, Collateral, and Creditor Rights in East Asia. In I. Dalla, ed., East Asia Finance: Selected Issues. CD ROM (attached). Asher, M. G South East Asian Provident and Pension Funds: Investment Policies and Performance. Paper prepared for a workshop on Pension Fund Reforms in Asia, organized by the Asian Development Bank Institute, Singapore, November Bank for International Settlements (BIS) Triennial Central Bank Survey: Foreign Exchange and Derivatives Market Activity in March. Bank of England Financial Stability Review.December. Barth, James, Gerard Caprio, and Ross Levine Rethinking Bank Supervision and Regulation: Till Angels Govern. Cambridge, UK: Cambridge University Press. Basel Committee on Banking Supervision (BCBS) International Convergence of Capital Measurement and Capital Standards: a Revised Framework. Basel, Switzerland: Bank for International Settlements. Beale, Lieven, Annalisa Ferrando, Peter Hördahl, Elizaveta Krylova, and Cyril Monnet Measuring Financial Integration in the Euro Area. European Central Bank Occasional Paper 14, April. Beck, Thorsten, and Inessa Love Business Environment, Corporate Governance, and Access to Finance. Unpublished background note for East Asia Finance: the Road to Robust Markets. Washington, DC: World Bank. Beck, Thorsten, Asli Demirgüç-Kunt, and Vojislav Maksimovic Bank Competition, Financing Constraints, and Access to Credit, Journal of Money, Credit, and Banking 36 (June): Financial and Legal Constraints on Growth: Does Firm Size Matter? The Journal of Finance IX (1). Beck, T., Asli Demirgüç-Kunt, and Maria Soledad Martínez- Peria Reaching Out: Access to and Use of Banking Services across Countries. Policy Research Working Paper Washington, DC: World Bank. Bekaert, G., C. R. Harvey, and A. Ng Market Integration and Contagion, Journal of Business 78 (1): Berger, A., and D. Humphrey The Dominance of Inefficiencies over Scale and Product Mix Economies in Banking, Journal of Monetary Economics 28: Bank Scale Economies, Mergers, Concentration, and Efficiency: the US Experience. Wharton Financial Institutions Center Paper Berger, Allen N., Rebecca S. Demsetz, and Philip E. Strahan The Consolidation of the Financial Services Industry: Cause, Consequences, and Implications for the Future, Journal of Banking and Finance 23: Boyd, John, Gianni de Nicolo, and Bruce D. Smith Crises in Competitive versus Monopolistic Banking Systems, Journal of Money, Credit, and Banking 36: (2) Briault, C Building a Single Financial Services Regulator. Paper prepared for the conference on Challenges for Unified Financial Supervision. Tallinn, Estonia, July Buch, C. M., K. Carstensen, and A. Schertler Macroeconomic Shocks and Foreign Bank Assets. Kiel Working Paper Kiel Institute for World Economics, July. Cadogan Financial Key Issues and Constraints in the Development of the Investment Fund Industry in East Asia, Background paper prepared for East Asian Finance: the Road to Robust Markets. Mimeo. Washington, DC: World Bank. Claessens, Stijn Competitive Implications of Cross-border Banking. Policy Research Working Paper Washington, DC: World Bank. Claessens, Stijn, and T. Glaessner Are Financial Sector Weaknesses Undermining the East Asian Miracle? Washington, DC: World Bank The Internationalization of Financial Services in Asia. Policy Research Working Paper Washington DC: World Bank. Claessens, Stijn, and Luc Laeven What Drives Banking Competition? Some International Evidence, Journal of Money, Credit, and Banking 36 (3), June, Part 2: Claessens, Stijn, and Jong-Kun Lee Foreign Banks in Lowincome Countries: Recent Developments and Impact. In James Hanson, Patrick Honohan, and Giovanni Majnoni (eds.), Globalization and National Financial Systems. Washington, DC: World Bank. Claessens, S., A. Demirgüç-Kunt, and H. Huizinga How Does Foreign Entry Affect the Domestic Banking Market? Policy Research Working Paper Washington, DC: World Bank. Clark, J Economic Cost, Scale Efficiency, and Competitive Viability in Banking, Journal of Money, Credit, and Banking 28: Clarke, George R.G., Robert Cull, and Maria Soledad Martínez- Peria Does Foreign Bank Penetration Reduce Access to Credit in Developing Countries? Evidence from Asking Borrowers. Mimeo. Washington, DC: World Bank. Clarke, G., R. Cull, M.S. Martínez-Peria, and Susana M. Sánchez Foreign Bank Entry: Experience, Implications for Developing Countries, and Agenda for Further Research. Policy Research Working Paper Washington, DC: World Bank. Committee on the Global Financial System (CGFS) How Should We Design Deep and Liquid Markets? The Case of Government Securities. CGFS Publication 13. Basel, Switzerland: Bank for International Settlements. 209

2 210 References Consultative Group to Assist the Poorest (CGAP) Commercial Banks and Microfinance: Evolving Models of Success. CGAP Focus Note 28. Credit Lyonnais Securities Asia (CLSA) and Asian Corporate Governance Association (ACGA). Various years. Corporate Governance Watch: Annual Survey of Corporate Governance in Asia. Dalla, I Deepening Capital Markets in East Asia. Unpublished background paper for East Asian Finance: the Road to Robust Markets. Washington, DC: World Bank Asset Securitization Markets in Selected East Asia Countries. In I. Dalla, ed., East Asian Finance: Selected Issues. CD-ROM (attached). Dalla, I. (ed.) East Asian Finance: Selected Issues. CD-ROM (attached) de Luna Martínez, J., and T. Rose International Survey of Integrated Financial Sector Supervision. Policy Research Working Paper Washington, DC: World Bank. de Nicolo, G., P. Bartholomew, J. Zaman, and M. Zephirin Bank Consolidation, Internationalization, and Conglomeration: Trends and Implications for Financial Risk. IMF Working Paper WP/03/158. Washington, DC: International Monetary Fund. Demirgüç-Kunt, Asli, and E. J. Kane Deposit Insurance around the Globe: Where Does It Work? Journal of Economic Perspectives 16 (2): Demirgüç-Kunt, Asli, Luc Laeven, and Ross Levine Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation, Journal of Money, Credit, and Banking 36 (3): Demirgüç-Kunt, Asli, H. Min, and Ross Levine Opening to Foreign Banks: Issues of Stability, Efficiency, and Growth. In Seongtae Lee, ed., The Implications of Globalization of World Financial Markets. Seoul, Korea: Bank of Korea. Detragiache, Enrica, Poonam Gupta, and Thierry Tressel Foreign Banks in Poor Countries: Theory and Evidence. IMF Working Paper 06/18. Washington, DC: International Monetary Fund. De Young Robert, William Hunter, and Gregory Udell The Past, Present and Probable Future for Community Banks. Journal of Financial Services Research 25 (2 30), April/June. Djankov, S., R. La Porta, F. Lopez de Silanes, and A. Shleifer The Law and Economics of Self-dealing. NBER Working Paper W Cambridge, MA: National Bureau of Economic Research. Dobson, Wendy, 2005, Background Paper: Trade in Financial Services. Mimeo. Trade Division. Washington, DC: World Bank. Dolar, V., and C. Meh Financial Structure and Economic Growth: a Non-Technical Survey. Bank of Canada Working Paper Edwards, A.K., L.S. Harris, and M.S. Piwowar Corporate Bond Market Transparency and Transaction Costs. United States Securities and Exchange Commission. Endo, T., and G. Rhee Margin Purchases and Short Sales in Emerging Markets: Their Rationales and Design Variables. Mimeo. Washington, DC: World Bank. Ernst and Young Asia-Pacific Basel II Survey. Ernst and Young Corporate Statement. Fitch Ratings Basel II: Bottom-Line Impact on Securitization Markets. Credit Policy Special Report Managing Growth: the Challenge of Consumer Lending in Asia. Special Report, March. Focarelli, Dario, and Alberto F. Pozzolo The Determinants of Cross-border Bank Shareholdings: an Analysis with Banklevel Data from OECD Countries. Proceedings, Federal Reserve Bank of Chicago May: Francis, Jere R., Inder K. Khurana, and Raynolde Pereira The Role of Accounting and Auditing in Corporate Governance and the Development of Financial Markets around the World. Paper presented to the 2002 International Symposium on Audit Research, July, Sydney, Australia. Galindo, A., and M. Miller Can Credit Registries Reduce Credit Constraints? Empirical Evidence on the Role of Credit Registries in Firm Investment Decisions. Paper prepared for the seminar on Towards Competitiveness: the Institutional Path, Inter-American Development Bank Annual Meetings. Garcia-Merro, Alicia, Maria Soledad García Herrero, and Maria Soledad Martínez-Pería The Mix of International Banks Foreign Claims: Determinants and Implications. Mimeo. Washington, DC: World Bank. Giddy, Ian. Asset Backed Securities: Managing the Credit Risks. Stern School of Business, New York University. Power point presentation. Goldberg, Linda S When Is Foreign Bank Lending to Emerging Markets Volatile? In Sebastian Edwards and Jeffrey Frankel (eds.), Preventing Currency Crises in Emerging Markets. Cambridge, MA, and Chicago, IL: National Bureau of Economic Research and University of Chicago Press The International Exposure of US Banks. NBER Working Paper Cambridge, MA: National Bureau of Economic Research. Grose, C., and F. Friedman Promoting Access to Primary Equity Markets: a Legal and Regulatory Approach. Policy Research Working Paper Washington, DC: World Bank. Gyntelberg, J., G. Ma, and E. M. Remolona Corporate Bond Markets in Asia, BIS Quarterly Review, December: Basel: Bank for International Settlements Developing Corporate Bond Markets in Asia, BIS Papers 26 (February): Basel, Switzerland: Bank for International Settlements. Hess, D., and G. Impavido Governance of Public Pension Funds: Lessons from Corporate Governance and International Evidence. Policy Research Working Paper Washington, DC: World Bank. Hong Kong and Shanghai Banking Corporation (HSBC) Guide to Asia s Local Currency Bond Markets May Back in the Fold: Asia Invests in Itself. April. Hong Kong Mortgage Corporation (HKMC) The Hong Kong Mortgage Corporation Limited. In I. Dalla, ed., East Asian Finance: Selected Issues. CD-ROM (attached). Hughes, J. P., and L. Mester Bank Capitalization and Cost: Evidence of Scale Economies in Risk Management and Signaling, Review of Economics and Statistics 80, May: Hughes J. P., W. Lang, L. Mester, and C.-G. Moon Efficient Banking under Interstate Branching, Journal of Money, Credit, and Banking 28, November: International Finance Corporation Emerging Markets Factbook. Washington, DC, and Oxford: World Bank and Oxford University Press. International Monetary Fund Global Financial Stability Report. September Jiang, G., and R. McCauley Asian Local Currency Bond Markets, BIS Quarterly Review, June. Basel: Bank for International Settlements.

3 References 211 Jin, L., and S.C. Myers R2 around the World: New Theory and New Tests. NBER Working Paper W Cambridge, MA: National Bureau of Economic Research. J. P. Morgan Basel II and Securitization: a Paradigm Shift. European Securitized Products Research, January. J. P. Morgan. Laeven, Luc Banking Sector Performance in East Asian Countries: The Effects of Competition, Diversification, and Ownership. Mimeo. Washington, DC: World Bank. La Porta, R., F. Lopez-de-Silanes, and A. Shleifer What Works in Securities Laws? Journal of Finance LXI (1): Lesmond, D., C. Trzcinka, and J. Ogden A New Estimate of Transaction Costs, Review of Financial Studies 12 (5): Levine, Ross Foreign Banks, Financial Development, and Economic Growth. In Claude Barfield (ed.), International Financial Markets. Washington, DC: American Enterprise Institute Press. Love, Inessa, and Nataliya Mylenko Credit Reporting and Financing Constraints. Policy Research Working Paper Washington, DC: World Bank. Ma, G., and E. M. Remolona Opening Markets through a Regional Bond Fund: Lessons from ABF2, BIS Quarterly Review, June. Basel, Switzerland: Bank for International Settlements. Martínez-Peria, Maria Soledad, and Ashoka Mody How Foreign Participation and Market Concentration Impact Bank Spreads: Evidence from Latin America, Journal of Money, Credit, and Banking 36: Mian, Atif Foreign, Private Domestic, and Government Banks: New Evidence from Emerging Markets. Unpublished manuscript. University of Chicago. Micco, Alejandro, Ugo Panizza, and Mónica Yañez Bank Ownership and Performance: Are Public Banks Different? Mimeo. Washington, DC: Inter-American Development Bank. Ng, Angela Volatility Spillover Effects from Japan and the US to the Pacific Basin, Journal of International Money and Finance 19: Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance. Paris: OECD. Packer, F Mind the Gap: Domestic versus Foreign Sovereign Ratings, BIS Quarterly Review, September.Basel, Switzerland: Bank for International Settlements. Panzar, John C., and James N. Rosse Structure, Conduct, and Comparative Statistics. Bell Laboratories Economics Discussion Paper Testing for Monopoly Equilibrium, Journal of Industrial Economics 35: Petersen, Mitchell A., and Raghuram Rajan The Effect of Credit Market Competition on Lending Relationships, Quarterly Journal of Economics 110: Does Distance Still Matter? The Information Revolution in Small Business Lending, NBER Working Paper Cambridge, MA: National Bureau of Economic Research. Rahardja, S Integration in Equity Markets in East Asia: a News-based Approach. Unpublished background paper for East Asian Finance: The Road to Robust Markets. Washington, DC: World Bank. Renaud, Bertrand Mortgage Finance in East Asia: A framework for comparison and evaluation. Background paper prepared for East Asian Finance: the Road to Robust Markets. Washington, DC: World Bank. Rosse, James N., and John C. Panzar Chamberlin vs. Robinson: An Empirical Test for Monopoly Rents. Bell Laboratories Economics Discussion Paper 90. Standard and Poor s Corporate Governance Disclosures. Studies of Hong Kong, Indonesia, Malaysia, Singapore, and Thailand, produced jointly with the Corporate Governance and Financial Reporting Center. Takeuchi, Atsushi Study of Impediments to Crossborder Bond Investment and Issuance in Asian Countries. Paper prepared for discussion at the working group under the ASEAN+3 Asian Bond Fund Initiative. Thompson, J. K., and S. M. Choi Governance Systems for Collective Investment Schemes in OECD Countries. OECD Financial Affairs Division, Occasional Paper No. 1. Paris: Organisation for Economic Co-operation and Development. Vives, X Competition in the Changing World of Banking, Oxford Review of Economic Policy (4) 17: World Bank and International Monetary Fund (IMF) Developing Government Bond Markets: a Handbook. Washington, DC: World Bank and IMF. World Bank and International Monetary Fund (IMF) Financial Sector Assessment: a Handbook. Washington, DC: World Bank and IMF.

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5 Index accounting standards and practices, 3, 61 62, 68 pensions schemes and, 136 securitization, 162 annuitization, 136 ASEAN+3, 2, 3 Asian Bond Funds (ABF), 2 3, asset-backed commercial paper (ABCP), 168 asset-backed securities, 158 transactions, 164 asset-backed transactions, 164 ATM penetration, 80 audit committees, bankruptcy, 59, 163 banks and banking, 27, assets, 4, 6, 27 barriers, branches, 80 challenges, 22 23, closures, 7 competitiveness, 84 89, 92 93, 95 consolidation, 7, 63, 81 disclosure, 47 48, 49 efficiency and health, efficiency improvement, 84 85, 87 efficiency indicators, 66 equity and bond markets and, 28 foreign access to finance, licensing, 92 monitoring and supervision, 92 ownership, 64 reach, 79, 80, 81, risks, 9 risk transfers, 170 soundness indicators, 66 stability, standards, strategies, 89 structural changes, empirical analysis, structure, supervision, Basel Core Principles (BCP), banking services, 169 access and usage, 79, 80, 81, 89 availability, 90 policy, 89 Basel Core Principles (BCP) banking supervision, 89 90, 92, 170 Basel II, compliance with, 91 Bauhinia Program, 160 boards of directors oversight of, responsibilities, 49, bond markets, 3 4, 5, 6, 7 8, 23, 26 27, 101, 109, 126 bank assets and, 28 constraints, 21 credit risk and, 20, 39 diversification, 34 growth, 104 integration, 34, 36 liquidity, 112 pricing, 12 regional, 2 3 regulations, 38 size, 41, 102 standards and procedures, taxation, 39 transactions costs, 14 bonds covered, mortgages and, 76 foreign, 106 investment, policy measures, 43 issuers, 105 local currency and, 35 outstanding, 4, 27 branching restrictions, microfinance, 91 Cagamas, 76 capital banks, 9 microfinance, 91 Capital Adequacy framework, 9 Basel II, capital markets, risk transfers, 170 cash. See currency central counter-party (CCP), 15 Chiang Mai Initiative, 2 China accounting standards and practices, 61 banks and banking sector, 64, 65, 69 Company Law, insurance, mortgages, mutual funds, 144 securities markets, 113, 126, 127 securitization, 159, 163 shareholders rights, class-action suits, 54 clearance and settlements systems, 39, 115, 115 collateral, 74 collateralized debt obligations, 158 commodity derivatives, 13, 151 company ownership, 50 competition, 169 policy, 86 competitiveness, banks, 84 89, 92 93, 95 concessional terms, 68 conflict of interests, 53 conglomerates, supervision, see also supervision, unified consolidation, 7, 63, 81, 83, 84, 93, 170 measures of, 82 securities and, 111 consumer lending, 69, mortgages, contractual savings, 129 corporate governance, 11, 46 52, 62 challenges, 62 importance, 46, 47 incentives and framework, 92 investors and, 120 OECD principles, 51 corporations bond markets and, 21, 126 control, 50 de-leveraging and performance, financing, 1, 6, insolvency, 55, 59 lending, 77 79, 84 small, costs. See transaction costs credit derivatives, 13, 151 domestic, 6 GDP and, 6 markets, regulations, 38 registries, 90 reporting infrastructure, 51 risk assessment, 20 risks, 9, 170 risks, bond market and, 39 risks, securitization,

6 214 Index credit-information systems, 49 elements, 50 legal and regulatory framework, 50 ownership, 50 scope of coverage, 50 creditors information availability, insolvency and, rights, 54 55, 58, secured and unsecured, 58 credit-rating agencies, 12, 20, 113, 166 rationale and feasibility of regional, 20, 41 42, 39 standards, 3 credit risk capital requirements, economic risks and, 168 management, 9 10 cross-border banking, BCP, 92 currency bonds and, 35 derivatives markets, 157 markets, 13, 15, 153 swap agreements, 2 debt-to-equity ratio, 78, 79 defined-benefit schemes, 136 delinquencies, 71 demutualization, status of, 123 deposits in banks, 69 insurance, 92, 93, 94 rates, 88 derivatives markets, 9, 13, 15, 43, cash markets, 153 domestic, 3 elements and sequencing, 157 exchanges, 156 features, infrastructure, investors and, 40 key elements, legal and regulatory framework, 15, market status, 156 participants, 154 post-financial crisis, products and turnover, 151 risk mitigation, stylized elements and sequencing, 157 taxes, 156 disclosure, 12 banks, 47 48, 49 equity markets, 106 investors, to, listed firms, 47, 48 requirements index, 121 shareholders and, diversification, 3 4, benefits, pension investment allocations, economic growth, 1, 2 economies of scale and scope, 7 efficiency, 3, 7 8 banks and banking, 65 68, 84 85, 87 equity markets, 8, securities markets, 11, enforcement, 46, 53, 155 financial standards, mutual funds, secured rights, 58 entry and exit restrictions, 86 BCP, 92 foreign banks, equity derivatives, 13, 15, 151 equity markets, 3, 6 7, 10, 101 bank assets and, 28 capitalization, 4, 27 efficiency, 8, growth, 26 integration, liquidity, regulations, 38 returns, 32 size, 102 stability, 108 exchange-rate devaluation, 165 exchange-traded derivatives (ETDs), 15, 150, 157 exchange-traded funds (ETFs), 37 Executives Meetings of East Asia Pacific Central Banks (EMEAP), 2, 36 fee-based services, 7 finance, access for smaller corporations, securities market, financial advice, 146 financial information infrastructure, 51 financial integration, 29, 41 bank claims, 30 extent, portfolio investments, 31, 34 regional, 3, 22 financial intermediaries banks, financial markets and, linkages and, products, 21 financial markets assets, 26 effectiveness, 4 intermediaries and, today, 3 10 financial reporting, 12, 62 standards and practices, 68 financial sector agenda, 10 assets, 4, 27 financial services demand, 1 range, 1 2 financial systems, 22 attributes and underpinnings, risks and stability, 9 structure, 4, 27 financing requirements, 1 firms, listed, 104 fixed-income funds Indonesia, 147 Korea, 145 foreign direct investment, 30 foreign entities, 7 access, 104 assets and liabilities, 30 banks, 93 entry and influence, 87 88, 92 governance, 93 taxation, 39 foreign exchange, 38, 157 access regulations, 38 derivatives, 13, 15, , 166 free-rider problem, 25, 26 futures exchange, gain-recognition, securitization, 162 GDP, investment and, 2 governance mutual funds, 143 pension funds, hedging costs, 38 instruments and their lack, 20 Hong Kong (China) banking competitiveness, 84 insolvency systems, 60 mortgages, 75 mutual funds, 141, pension funds, 131, 132, 133, 134, 137 securities markets, 126 securitization, 159, 160, 163, 163 household debt, 70 housing markets, 77 income-diversification index, 81, 82 Indonesia accounting standards and practices, 61 banking competitiveness, 85 banks and banking sector, 64, 65, 67, 69 insolvency system, 59 institutional infrastructure, lending, 70, 71 mortgages, 72, 74 mutual funds, 147 securities markets, 126, 127 securitization, 163 shareholders rights, 54 information, creditors and, dissemination, 47 exchange, 93 financial markets and, 45

7 Index 215 pricing securities, sharing, 41, 43 see also disclosure infrastructure funding, securitization, 162 insider trading, 53 insolvency systems, creditor rights and, 55, Korea, 59 institutional infrastructure, 3, 22, derivatives markets, 155 microfinance, 91 institutional investors, 3, 22, 129, 130 assets, 15 16, 27, 28 instruments that appeal to investors, insurance, 17, 18 life insurance, 17, 129, 130, 139, penetration and density, 17 risk management, 17 insurance sector, assets, increasing, indicators of concentration, 140 indicators of development, 139 investment regulations, 141 risk and risk transfers, 170 integration gains from, regional initiatives and, interest coverage, 78 interest rates microfinance, 91 risks, 165 derivatives, 13, 15, 151, 157 intermediaries banks, financial markets and, linkages and, products, 21 internal assessment approach, 168 internal-ratings-based approach (IRB), 167, 168 International Organization of Securities Commissions (IOSCO) principles, international reserves, 1 intra-regional trade, 2 investment rate, 1 GDP and, 2 investments alternative markets, asset-class exposure, 142 cross-border, impediments, products, 18 investor base, 23 broadening, 15 18, 120 strengthening, investors confidence, 18, equitable treatment of, 144 institutional, 3, 22, 15 16, 27, 28, 129, 130 instruments that appeal to, rights of, 144 Jakarta Stock Exchange rules, judicial decision making and enforcement, 59 Korea, Republic of accounting standards, 61 banks and banking sector, 64 65, 67, 69, 84 bond markets, 113 capital adequacy, 99 Corporate Code, 54 insolvency systems, institutional infrastructure, 53, 54 legislation, 148 lending, 71 mutual funds, 145 pension funds, , 132, 133, 135, 137 securities markets, 126, 140 securitization, 159, 160, 163 shareholders rights, 54 KOROmas Fund Ltd., 160 legal and regulatory systems, 3, 13, 15, 18, 20, 38, 43, 45, 62, 90 challenges, 23 consumers, 69, corporate, 6, corporate insolvency, 59 credit-information system, 50 demutalization and, derivatives markets, 15, disclosure-based vs merit-based, enforcement, 18, 46, insurance, 141 investors, 120 IOSCO principles, lending and loans mandates, 148 margin, 119 microfinance, 91 mortgage lending, 74, 75 mutual funds, , non-performing loans (NPL), 9, 65, regulators, 147, 148, relationship-based vs rules-based, 89 residential mortgages, risks, securities markets, 116, securitization, 19, 162, , 167 unified supervision, 173, 175 liability -based management, standards index, 121 licensing, 90 microfinance, 91 life insurance, 17 linkages across markets, liquidity, 7 8, 13, 21 enhancement, 112 equity derivatives vs cash markets, 154 mortgages, 76 mutual funds, 142 risks, 165 securities market, 102, listed firms, 104 loans. See lending Malaysia banking competitiveness, banks and banking sector, 65, 67, 69 bond market, 104, 112, 113 disclosure system, 125 insolvency systems, 60 lending, 71 mortgages, 76 mutual funds, 144 pension funds, 130, 132, 134, 135, securities markets, 126, 140 securitization, , managerial issues, unified supervision, margin trading, accounts, and lending, 116, 119 markets capitalization, 26 discipline, Basel II, 98, 99 linkages across, practices and infrastructures, differences, 20 risk, 170 surveillance, 155 Mexico, securities law, 122 microfinance, 79 81, 84 enhancing-environment, 91 money laundering, combating, 95, 96 mortgage-backed securities (MBS), 76 77, 158, 166 mortgages debt, 72 default systems, 74, 77 interest rates, 75 market requirements, maturities, residential lending, sale of, movable property, treatment of, 57 mutual funds, 17 18, 25, development elements, governance structures, 143 pricing of shares, 144 netting, 155 non-bank financial institutions, 21 risk and, 9 10 non-performing loans (NPL), 9, 65, 67 68

8 216 Index operational risks, 166 over-the-counter (OTC) derivatives, 15, , 157 Pan Asian Bond Index Fund (PAIF), 37 partially unified agencies, advantages and disadvantages, 172 pension funds, 16 17, asset allocation, asset size and type, 130 contribution rates, coverage, defined-benefit, 16 defined-contribution, 16 governance framework, investment allocations, risk management, taxation, 133 per capita income, household debt vs, 70 Philippines accounting standards and practices, 61 banks and banking sector, 65, 69, 85 insolvency systems, 59, 60 institutional infrastructure, 53 investment legislation, 143 pension funds, 131, 134, 135, 138 securities markets, 114, , 140 securitization, 163 policy and policymaking, 3, 22, 23, 26, 29 banking services, 89 environment, 88 measures, 43 mutual funds, 146 securities markets, 102 unified supervision, portfolio investments, 31, 34 assets and liabilities, 31 equity and debt, 30 prepayment risk, 165, 166 pricing information benchmarking, rating agencies, 113 securities, trade reporting, primary-dealer system, 112 private sector, financing, 69 property movable, 57 real, 56 Public Company Act, Thailand, 53 public interest, role, 124 publicity, security interests, 56, 57 rating agencies. See credit-rating agencies ratings-based approach (RBA), 167 real-estate-investment trusts (REITs), real property, 56 regional cooperation, 2, 3 credit-rating agency, 39, 41 diversification and, information sharing, new areas, regions changing context, 1 3 initiatives to enhance integration, regulation. See legal and regulatory systems regulators, 147, 148, remedial measure, BCP, 92 prepayment risk, 165 report outline and structure, repurchase (repo) agreements, 112, 116 markets, 15, 157 reserves, international, 1 return on assets, 78 risk, bearing capacity, 2 diversification, 26 monitoring, 21 preferences, 15 securities market, 115 securitization, sharing, 18 21, 23, 26, transfer, 9, 20 23, 170 risk management and mitigation framework, 43 mechanisms, 166 pension funds, securitization, rules. See legal and regulatory systems secondary market, liquidity and, 111 secured lending, secured rights, recording and registration, 55 securities, 7, asset-backed, 158 instruments that appeal to investors, pricing information, securities markets, 9, 107, access to, benchmarking, challenges, demutualization, developing, efficiency, 11, finance, access to for smaller corporations, fixed income, 114 increasing allocations to, infrastructure, 12 13, 126 instruments, 7, 18 20, investor base, 15 18, 120 lending, 116 liquidity, , post-financial crisis, pricing information, principal dealers, 112, 113 rating agencies, 113 regulatory and supervisory framework, settlement, 115 strategy, 111 trade reporting, transactions costs, 12 13, 15, , 119 securitization, 18 20, 21, 23, 122 Basel II and, cross-border, derivatives markets, elements needed, 19, infrastructure funding, 162 legal and regulatory issues, 162, principles, 158 risk and risk management, sequencing, security interests creation of, legislation, registration, rights enforcement, 58 self-dealing abusive, 53 anti-self-dealing standards index, 121 self-interest, 53 service-performance risk, 165 services, range, 25 settlement, securities market, 115 shareholders equitable treatment, 50, 53 minority, 11 rights, 49 54, 62 short selling, 116, 119 Singa Secured Assets, 161 Singapore banking competitiveness, 84 futures exchange, 152 insolvency systems, 60 mutual funds, 141 pension funds, 131, 132, securitization, 161, 163 sovereign risk, 165 special-purpose vehicle (SPV), 158, 162, 163, stability, 9 10 foreign banks and, 88 staff issues, unified supervision, 173 standardization, securities, 111 standardized approach, 167, 168 standards, bond market, stock exchange corporatization, 123 demutualization, Stock Exchange Act, Korea, 54 stock-lending system, 119 stock market, 3, 7, 26, 101 access to, 103 bank assets and, 28 trading fixed-income instruments, 114 structural risks, 165 supervision, unified,

9 Index 217 advantages and disadvantages, 172 implementation issues, legal constraints, 173 managerial issues, pros and cons, staff issues, 173 time required, 174 timing, 175 supervisors roles and responsibilities, 174 separate, 172 supervisory framework BCP, 92 challenges, 23 formula, IOSCO principles, practices, 21 review process, Basel II, 97, 99 securities markets, trends and issues, supply-side issues, 2, 3, 37 swap-counterparty risk, 165 swaps, 166 taxation, 20, 38, 39 pension funds, 133 securitization, 162 terrorism, financing, 95, 96 Thailand banking competitiveness, 85 banks and banking sector, 65, 67 68, 69 bond market, 113 insolvency systems, 60 institutional infrastructure, 53 lending, 71 mortgages, 72, 74 pension funds, , , 134, 138 securities markets, 140 securitization, 163 shareholders rights, 53 stock exchange, 114 trade reporting, transaction costs, 38 bond markets, 14 equity markets, reducing, 12 13, 15 securities market, , 119 small corporations, 120 transparency, shareholders and, trusts, unified supervision, advantages and disadvantages, 172 implementation issues, legal constraints, 173 managerial issues, pros and cons, staff issues, 173 time required, 174 timing, 175 unsecured creditor rights, 58 venture capital, 122 volatility spillover coefficients, estimates for, 33

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12 Well-functioning financial markets are critical for supporting East Asia s ambitious growth and development agenda. Over the coming years, East Asia s financial sector will need to be highly diversified to meet the needs of increasingly complex and sophisticated economies. It will need to provide financial services efficiently, and it will need to be robust to withstand potential shocks in a fast-changing, globalizing world economy. Since the 1997 financial crisis, East Asian economies have made significant progress in strengthening and diversifying their financial markets. But sizable challenges remain in the main segments of the financial sector: banking, equity, and bond markets. East Asian Finance: The Road to Robust Markets provides a comprehensive overview of the financial markets in the East Asia region. It undertakes a systematic analysis of each of the financial segments in terms of access, efficiency, and stability, and discusses the remaining challenges and policy priorities. It argues that the East Asian economies need to focus on further developing the securities markets. In particular, given the depth of the financial sector overall, economies in East Asia lag behind in the relative importance of the bond market. The text discusses the critical policy agenda to further develop these markets, both at the regional and domestic levels. The book will be useful for policy makers, market participants, and development practitioners, as well as for researchers and students. ISBN