Corporate Bond Market in the Transition Economy of Vietnam, 1990-2010
AbstractCorporate bond appeared early in 1992-1994 in Vietnamese capital markets. However, it is still not popular to both business sector and academic circle. This paper explores different dimensions of Vietnamese corporate bond market using a unique, and perhaps, most complete dataset. State not only intervenes in the bond markets with its powerful budget and policies but also competes directly with enterprises. The dominance of SOEs and large corporations also prevents SMEs from this debt financing vehicle. Whenever a convertible term is available, bondholders are more willing to accept lower fixed income payoff. But they would not likely stick to it. On one hand, prospective bondholders could value the holdings of equity when realized favorably ex ante. On the other hand, the applicable coupon rate for such bond could turn out negative inflationadjusted payoff when tight monetary policy is exercised and the corresponding equity holding turns out valueless, ex post. Given the weak primary market and virtually nonexistent secondary market, the corporate bond market in Vietnam reflects our perception of the relationship-based and rent-seeking behavior in the financial markets. For the corporate bonds to really work, they critically need a higher level of liquidity to become truly tradable financial assets.
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 10-001.RS.
Length: 38 p.
Date of creation: 2010
Date of revision:
Publication status: Published by:
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More information through EDIRC
Vietnam; Corporate Bond; Interest Rate; Transition Economy; Debt Market;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-23 (All new papers)
- NEP-CFN-2010-01-23 (Corporate Finance)
- NEP-TRA-2010-01-23 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Quan Hoang Vuong & Tran Tri Dung, 2009. "The Cultural Dimensions of the Vietnamese Private Entrepreneurship," Working Papers CEB 09-027.RS, ULB -- Universite Libre de Bruxelles.
- Quan Hoang Vuong, 2000. "The Vietnamese Corporate Bond Market An Early Exploration into the 1992-1999 Period," Working Papers CEB 00-001.RS, ULB -- Universite Libre de Bruxelles.
- Andrew F. Brimmer, 1960. "Credit Conditions And Price Determination In The Corporate Bond Market," Journal of Finance, American Finance Association, vol. 15(3), pages 353-370, 09.
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