It is not so much the size of the banking systems which is in mind here – in a number of cases, these are actually quite large (though there are some important exceptions like Indonesia, or the Philippines). Rather, it is the depth, resilience to shocks and capacity to intermediate the region's savings within the region that is at issue.
With the onset of the financial crisis of 1997–98, it was apparent that Asia was not resilient to disturbances in international capital markets. Foreign capital had flowed into east Asia – something which made sense then, and still makes sense now. The exchange rate risk associated with these flows, however, was being borne mostly in the recipient countries: they had borrowed foreign currency unhedged.