Abstract

We examine whether core ASEAN+3 countries might be interested in joining a financial "crisis union," allowing for the role of uncertainty by constructing a stylized real options model of the decision problem involved. We calibrate that model by proxying financial fragility with commonly used bank asset ratios and observe that, according to our criteria, a wider financial crisis union might be more attainable the more encompassing that grouping is; however, our results also reinforce the common perception of pervasive, possibly prohibitive, heterogeneity in these countries' banking and financial systems.

Recommended Citation

Strobel, Frank (2009) "Financial Fragility and Crisis Union in the Asia-Pacific Region," Global Economy Journal: Vol. 9 : Iss. 2, Article 7.
DOI: 10.2202/1524-5861.1460
Available at: http://www.bepress.com/gej/vol9/iss2/7