East Asia's Firms: Starved for Financing and Nowhere to Go

Local investment in East Asia’s financial markets is being stunted – by the region’s own inadequate banking sectors and uneven growth of its securities markets, Oxford Analytica argues in a recent analysis (restricted access). As long as that remains the operative characteristic in East Asia, cross-border investments will remain weak and capital flows will go to bolster reserves instead of funding development projects.

Starved for financing, East Asian firms should look to equity and bond markets, says OA, rather than banks. In turn, the region's banks must focus on private sector financing, particularly small and medium companies, which are responsible for most of the production and jobs in regional economies.