Ⅰ. Introduction 2

Ⅱ. Theoretical Background 5
1. Financial Integration and Economic Growth 5
2. Financial Integration and Business Cycle 7
3. Welfare Gains and Financial Crises 10

Ⅲ. Financial Integration in NEA at Present 12
1. Korea12
2. China17
3. Japan 25

Ⅳ. Empirical Evidence 32
     1. Uncovered Interest Parity (UIP) Condition 32
     2. Co-movement in Stock Market Returns 34

Ⅴ. Prospects and Policy Implications38