Abstract:
Macroeconomic growth and stability are two of the major benefits of
financial development, though there are differences in the literature on the channels
through which this growth and stability can be achieved. In recent years, a number
of emerging economies experienced phenomenal growth. At a micro level, one needs
to understand why and how financial deepening could bring changes in economic
agents’ behavior leading to an impact on the saving- investment relationship. At
the macro level, financial development, integration and globalization could be
possible channels to growth. The purpose of this paper is two-fold. First, we provide
a comprehensive discussion of the theoretical and empirical literature on the role of
important micro- and macro-policy variables in achieving macroeconomic stability
with reference to Southeast Asia. Second, we present new empirical evidence using
data from a selected sample of countries from the Asia Pacific region on the links
between financial integration, trade integration and growth.
