Multi-country empirical investigation into international financial integration

This paper focuses on the dynamics of international financial integration for a set of 13 industrial countries including Australia over the period 1990 to 2003 by analysing data on the level and composition of foreign assets and liabilities. The study provides insights into the broad trends on cross-country holdings and investigates the correlation of international asset positions with various 'explanatory variables' such as the degree of financial restrictions, the depth of financial markets, the openness to international trade, etc. The results show that the growth in goods trade and stock market capitalization are the main determinants of the growth in the scale of international balance sheets