Regional pull vs global push factors: China and US influence on Asia-Pacific financial markets

BIS Working Papers No 579
September 2016

This paper compares spillovers from the US and Chinese financial markets to the rest of Asia-Pacific. Structural VAR analysis points to the growing influence of Chinese equities and currency movements. In normal times China's influence in the equity market has risen to a level close to that of the United States, although the relative impact of the United States became stronger in crisis periods. Nonetheless, China's bond market remains a negligible player. The influence of China may be interpreted as a "regional pull" factor, while that of the United States remains a key "global push" factor. 

JEL classification: F30, G15

Keywords: China's impact, spillovers to Asian financial markets, US, structural VAR, sign restrictions