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Asean Bond Market Development

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  • Mahmood Pradhan
  • Shanaka J. Peiris
  • Mangal Goswami
  • Dulani Seneviratne
  • Joshua Felman
  • Andreas Jobst
  • Simon Gray

Abstract

Since the Asian crisis, ASEAN5 countries have expended considerable effort in trying to develop their domestic bond markets. Yet today these markets are not much larger, relative to GDP, than they were a decade before. How can we explain this? And does this mean that domestic markets have not, in fact, developed? The paper argues that bond market growth has been held back by a sharp fall in investment rates, which has left firms with little need for bond borrowing. Even so, markets have developed in other ways, to such an extent that substantial amounts of foreign portfolio investment have begun to flow into ASEAN5 bonds. These developments have important ramifications. With the investor base growing and infrastructure investment likely to rise, ASEAN5 bond markets could expand rapidly over the next decade, holding out the prospect that the region could finally achieve "twin engine" financial systems.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/137.

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Length: 32
Date of creation: 01 Jun 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/137

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Keywords: Asia; Bonds; Borrowing; Corporate sector; bond; bond markets; bond market; hedge funds; corporate bond; bond issuance; corporate bonds; capital inflows; domestic bond markets; government bonds; corporate bond markets; domestic bonds; hedge; financial system; capital markets; corporate bond market; domestic bond; bond yields; government bond; market assets; bond market development; government bond markets; financial systems; financial institutions; local currency bond; local currency bond markets; debt securities; financial markets; bond issues; bond funds; asian bond markets; government bond market; government bond yields; risk aversion; stock exchanges; developing bond markets; portfolio investment; domestic financial institutions; financial stability; corporate bond issuance; capital adequacy; foreign bonds; capital mobility; debt stock; capital formation; capital market; development of corporate bond markets; macro hedge; derivative; global bond; financial sector; bond flows; dollar bonds; equity investments; national stock exchanges; domestic bond market; composition of capital inflows; islamic bond; islamic bond market; market bond; hedging; equity finance; international bonds; foreign capital; cost of capital; capital account liberalization; international financial statistics; corporate securities; dollar bond market; bond purchases; bond financing; developing government bond; domestic financial sector; capital accounts; financial assets; emerging market bond; compliant bonds; bond stocks; foreign bond; bond market growth; volatile capital; denominated bonds; hedging instruments; conventional bonds; capital flow volatility; global bonds; hedge fund; derivative instruments; local bond markets; securities transactions; currency mismatch; capital gains tax; aggregate bond index; term bond; capital controls; foreign portfolio investment; financial economics; developing government bond markets; local capital markets; local bond; foreign exchange derivatives; bond maturities; bond price; asian bond market; new securities; dollar bond; financial instruments; capital flows; domestic government bonds; bond contracts; domestic financial system; islamic bonds; money market; bond indices; domestic securities; bond investors; equity markets; interest rate derivatives; financial fragility; gross capital formation; capital flow; developing bond market; macro hedge funds; net capital; capital gains; derivatives transactions; bond index; emerging market bonds; mature markets; bond flow; stock adjustment;

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  1. Daniel, L., 2008. "Foreign investors’ participation in emerging market economies’ domestic bond markets," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 12, pages 61-77, Summer.
  2. Barry Eichengreen & Pipat Luengnaruemitchai, 2004. "Why Doesn't Asia Have Bigger Bond Markets?," NBER Working Papers 10576, National Bureau of Economic Research, Inc.
  3. Hausmann, Ricardo & Panizza, Ugo, 2003. "On the determinants of Original Sin: an empirical investigation," Journal of International Money and Finance, Elsevier, vol. 22(7), pages 957-990, December.
  4. Burger, John D. & Warnock, Francis E., 2007. "Foreign participation in local currency bond markets," Review of Financial Economics, Elsevier, vol. 16(3), pages 291-304.
  5. Mark M. Spiegel, 2010. "Developing Asian Local Currency Bond Markets: Why and How?," Working Papers id:3030, eSocialSciences.
  6. Jacob Gyntelberg & Guonan Ma & Eli Remolona, 2006. "Developing corporate bond markets in Asia," BIS Papers chapters, in: Bank for International Settlements (ed.), Developing corporate bond markets in Asia, volume 26, pages 13-21 Bank for International Settlements.
  7. World Bank & International Monetory Fund, 2001. "Developing Government Bond Markets : A Handbook," World Bank Publications, The World Bank, number 13865, October.
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Cited by:
  1. Sonali Jain-Chandra & D. Filiz Unsal, 2012. "The Effectiveness of Monetary Policy Transmission Under Capital Inflows," IMF Working Papers 12/265, International Monetary Fund.
  2. Mukherjee, Dr. Kedar nath, 2012. "Corporate Bond Market in India: Current Scope and Future Challenges," MPRA Paper 42478, University Library of Munich, Germany.
  3. Yibin Mu & Peter Phelps & Janet Gale Stotsky, 2013. "Bond Markets in Africa," IMF Working Papers 13/12, International Monetary Fund.
  4. Olaf Unteroberdoerster & Runchana Pongsaparn, 2011. "Financial Integration and Rebalancing in Asia," IMF Working Papers 11/243, International Monetary Fund.

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