Regulatory regionalism and the limits of ASEAN banking integration: The case of Indonesia.

The Association of Southeast Asian Nations (ASEAN) aims to integrate the banking industry in the region. To achieve this, ASEAN members have agreed to create the ASEAN Banking Integration Framework (ABIF) to support such integration. Despite being endorsed in 2014, the framework remains vague and lacks clear policy coordination arrangements as well as standardisation instruments that enable ASEAN member states to integrate their banking sectors. This article examines why the member states agreed to such regulatory arrangements. Building upon the regulatory regionalism approach, we argue that the regulatory arrangement is underpinned by a socio-political struggle among dominant social forces in ASEAN. The article further argues that the political endeavour to internationalise domestic capital through the banking integration project remains problematic, given that local banking players seem to largely focus on protecting and penetrating domestic markets rather than regional expansion. This has hindered the progress of regional banking integration in ASEAN. To substantiate this argument, we use Indonesia's engagement in the process as a case study. This article contributes to the study of political economies of banking integration outside of the European experiment by emphasising the importance of state–society relations in shaping the outcome of regional integration. [ABSTRACT FROM AUTHOR]