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Why Dones't Asia have the biger bond markets

Author

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  • Barry Eichengreen

    (University of California, Berkeley)

  • Pipat Luengnaruemitchai

    (University of California, Bekeley)

Abstract

Asia¡¦s underdeveloped bond markets and dependence on bank finance have been topics of concern since the crisis of 1997-98. In this paper we document that the slow development of Asian bond markets is a phenomenon with multiple dimensions. Larger country size, stronger institutions, less volatile exchange rates, and more competitive banking sectors tend to be positively associated with bond market capitalization. Asian countries¡¦ strong fiscal balances, while admirable on other grounds, have not been conducive to the growth of government bond markets. The results suggest that the region¡¦s structural characteristics and macroeconomic and financial policies account fully for differences in bond market development between Asia and the rest of the world. Once one controls for these characteristics and policies, in other words, there is no residual ¡§Asia effect.¡¨

Suggested Citation

  • Barry Eichengreen & Pipat Luengnaruemitchai, 2004. "Why Dones't Asia have the biger bond markets," Working Papers 242004, Hong Kong Institute for Monetary Research.
    • Handle: RePEc:hkm:wpaper:242004
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    References listed on IDEAS

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    Cited by:

    1. Jonathan A. Batten & Warren P. Hogan & Peter G. Szilagyi, 2012. "Foreign Bond Markets and Financial Market Development: International Perspectives," Chapters, in: Masahiro Kawai & David G. Mayes & Peter Morgan (ed.), Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia, chapter 12, Edward Elgar Publishing.

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    More about this item

    Keywords

    bond markets; financial development;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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