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Broadening the offering choice of corporate bonds in emerging markets : cost-effective access to debt capital

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  • Endo, Tadashi
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    Abstract

    The development of corporate bond markets has been constrained in many emerging economies, partly because the regulatory model is implicitly designed for stand-alone public offerings. Corporate bonds are intrinsically more suitable for non-retail investors than for retail investors. Nonetheless, the prevailing regulatory model puts an excessive emphasis on disclosure and investor protection as well as government oversight, regardless of targeted investors. Such a non-differentiating regulatory approach disconnects issuers from investors by considerably raising opportunity costs to issuers. Broadening the choice of offering methods would lower corporate bond issuance costs, thereby allowing more issuers to finance their investments with bond issues. Additional forms of offerings are traditional private placements, institutional offerings, and shelf registration facilitated by integrated disclosure.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4655.

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    Date of creation: 01 Jun 2008
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    Handle: RePEc:wbk:wbrwps:4655

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    Keywords: Debt Markets; Emerging Markets; Deposit Insurance; Microfinance;

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    Cited by:
    1. Russ, Katheryn N. & Valderrama, Diego, 2012. "A theory of bank versus bond finance and intra-industry reallocation," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 652-673.

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