The changing network of financial market linkages: the Asian experience

We investigate the changing integration of Asian financial markets within the global financial network from 1995-2016, incorporating 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 two decades. They also suggest that many of these markets have transitioned from being primarily linked to the global markets via key bridge markets (such as Hong Kong) and over time developing stronger direct links with external markets. These findings highlight the potential importance of key geographical nodes in allowing emerging markets access to the international financial network.