A high-quality financial sector can assist local producers operating in a globalised economy to manage their risks more effectively. It also helps the domestic economy harness the greater availability of foreign capital.
Yet the experience of the east Asian countries in the late 1990s demonstrated that international openness also exposes any residual weaknesses in the financial sector, and that can potentially amplify the effects of international shocks to the great cost of the local economy. Since the Asian crisis, a great deal of effort has gone into trying to build more robust financial sectors in Asia.