Lane, Philip R.Schmukler, Sergio L.2012-06-052012-06-052007-02https://hdl.handle.net/10986/7168Three main features characterize the international financial integration of China and India. First, while only having a small global share of privately-held external assets and liabilities (with the exception of China's foreign direct investment liabilities), these countries are large holders of official reserves. Second, their international balance sheets are highly asymmetric: both are "short equity, long debt." Third, China and India have improved their net external positions over the past decade although, based on their income level, neoclassical models would predict them to be net borrowers. Domestic financial developments and policies seem essential in understanding these patterns of integration. These include financial liberalization and exchange rate policies, domestic financial sector policies, and the impact of financial reform on savings and investment rates. Changes in these factors will affect the international financial integration of China and India (through shifts in capital flows and asset and liability holdings) and, consequently, the international financial system.CC BY 3.0 IGOACCOUNTABILITYASSETSAUTONOMOUS MONETARY POLICYAUTONOMYBALANCE SHEETBALANCE SHEETSBANK LOANSBANKING SECTORBANKING SYSTEMBANKSBENCHMARKBONDSCAPITAL ACCOUNTCAPITAL ACCOUNT LIBERALIZATIONCAPITAL ACCOUNT RESTRICTIONSCAPITAL CONTROLSCAPITAL FLOWSCAPITAL GAINSCAPITAL INFLOWSCAPITAL OUTFLOWSCAPITALIZATIONCASH FLOWCASH FLOWSCOMMODITY PRICESCOMPOSITION OF CAPITAL INFLOWSCONSUMER CREDITCONSUMER DURABLESCORPORATE GOVERNANCECURRENCY APPRECIATIONCURRENT ACCOUNTCURRENT ACCOUNT BALANCECURRENT ACCOUNT DEFICITCURRENT ACCOUNT DEFICITSDEBTDEBT CRISISDEBT FLOWSDEFICITSDEPOSITSDIVIDEND POLICYDIVIDENDSDOLLAR DEPOSITSDOMESTIC BANKING SECTORDOMESTIC BANKSDOMESTIC BOND MARKETDOMESTIC CAPITALDOMESTIC CAPITAL MARKETSDOMESTIC FINANCIAL INTERMEDIATIONDOMESTIC FINANCIAL MARKETDOMESTIC FINANCIAL MARKETSDOMESTIC FINANCIAL SECTORDOMESTIC FINANCIAL SYSTEMDOMESTIC FINANCIAL SYSTEMSDOMESTIC RESIDENTSDOMESTIC SAVINGSECONOMIC COOPERATIONECONOMIC OUTLOOKECONOMIC PERFORMANCEECONOMIC RELATIONSEMERGING MARKET ECONOMIESEMPLOYMENTEQUITY INFLOWSEQUITY MARKETEQUITY MARKETSEXCHANGE RATEEXCHANGE RATE REGIMEEXCHANGE RATESEXPORTSEXTERNAL ASSETSEXTERNAL CAPITALEXTERNAL DEBTEXTERNAL FINANCEEXTERNAL FINANCINGEXTERNAL POSITIONEXTERNAL POSITIONSFEDERAL RESERVE BANKFINANCIAL CRISESFINANCIAL CRISISFINANCIAL DEEPENINGFINANCIAL DEPTHFINANCIAL DEVELOPMENTFINANCIAL INSTITUTIONSFINANCIAL INTEGRATIONFINANCIAL INTERMEDIATIONFINANCIAL LIBERALIZATIONFINANCIAL MARKET DEVELOPMENTFINANCIAL MARKETSFINANCIAL REFORMFINANCIAL SECTORFINANCIAL SUPPORTFINANCIAL SYSTEMFINANCIAL SYSTEMSFIXED ASSETFLOW OF CAPITALFOREIGN CURRENCYFOREIGN DIRECT INVESTMENTFOREIGN INVESTMENTFOREIGN INVESTORSFOREIGN PORTFOLIOFOREIGN PORTFOLIO INVESTMENTFOREIGN RESERVESGDPGLOBAL ECONOMYGLOBAL FINANCIAL SYSTEMGOVERNMENT BOND MARKETSGOVERNMENT BONDSGROSS DOMESTIC PRODUCTGROWTH RATESINSTITUTIONAL INVESTORSINSURANCEINTEREST RATEINTEREST RATESINTERNATIONAL BOND ISSUESINTERNATIONAL CAPITALINTERNATIONAL CAPITAL FLOWSINTERNATIONAL FINANCIAL CRISESINTERNATIONAL FINANCIAL INTEGRATIONINTERNATIONAL FINANCIAL SYSTEMINTERNATIONAL INVESTMENTINTERNATIONAL INVESTORSINTERNATIONAL MARKETSINTERNATIONAL MONETARY FUNDINTERNATIONAL STANDARDSINVESTMENT DECISIONSINVESTMENT FLOWSINVESTMENT RATEINVESTMENT RATESMARKET CAPITALIZATIONMINORITY SHAREHOLDERSMONETARY POLICYNEOCLASSICAL MODELSNET DEBTNET EQUITYNET EXTERNAL POSITIONSNET FOREIGN ASSETSOPPORTUNITY COSTSPARENT COMPANYPORTFOLIOPORTFOLIO INVESTMENTPORTFOLIO INVESTMENTSPORTFOLIOSPRIVATE BONDSPRIVATE CAPITALPRIVATE CAPITAL INFLOWSPRIVATE FIRMSPRIVATE INVESTMENTPRIVATE SECTORPROPERTY RIGHTSPROTECTIONISMPUBLIC INVESTMENTRAPID EXPANSIONRESERVE ASSETSRETAINED EARNINGSSAVINGSSAVINGS RATESSOURCE OF INVESTMENT FINANCESTOCK MARKETSTOCK MARKETSTAX INCENTIVESVALUATIONWorld Bank10.1596/1813-9450-4132