While low level of Asian financial market development is contingent on foreign exchange regulations, the low regional market integration is reflected in poor cross border presence of banks and financial institutions. 8. Along with infrastructure development and investment banks, cross border presence of commercial banks is also instrumental in the deepening of the regional capital market.
Cross border banking is, of course, determined by trade and investment flows. Trade and foreign direct investment (FDI) in Asia – both intra-regional and international – is growing by more than 10 per cent, almost twice the growth in G-7 countries. But the growth of financial integration is still limited with home country banking business being more than three fourth of their services.