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Designing the future of bond markets: Reducing transaction costs through tokenization

Author

Listed:
  • David Cisar

    (University of Bayreuth, FIM Research Center)

  • Benjamin Schellinger

    (University of Bayreuth, FIM Research Center)

  • Jens-Christian Stoetzer

    (Branch Business & Information Systems Engineering of the Fraunhofer FIT)

  • Nils Urbach

    (Branch Business & Information Systems Engineering of the Fraunhofer FIT
    Frankfurt University of Applied Sciences)

  • Florian Lennart Weiß

    (Branch Business & Information Systems Engineering of the Fraunhofer FIT)

  • Vincent Gramlich

    (Branch Business & Information Systems Engineering of the Fraunhofer FIT
    Frankfurt University of Applied Sciences)

  • Tobias Guggenberger

    (University of Bayreuth, FIM Research Center
    Branch Business & Information Systems Engineering of the Fraunhofer FIT)

Abstract

Corporate bonds are an attractive option for corporate financing. However, current bond markets face many challenges and inefficiencies, resulting in high transaction costs (TAC). In recent years, technological advancements like blockchain technology have enabled the possibility of reducing TAC in bond markets. Even though practice experiments with such solutions, academic literature lacks generic design knowledge under the TAC lens to design blockchain-based bonds. Thus, our research follows the design science research (DSR) paradigm to design and develop a bond prototype using the Ethereum blockchain protocol. Our results highlight the capability of blockchain-based bond markets to reduce TAC in the three dimensions of asset specificity, uncertainty, and transaction frequency. Further, our research provides design principles to contribute to both practice and the academic discourse on developing blockchain-based bond markets with reduced TAC.

Suggested Citation

  • David Cisar & Benjamin Schellinger & Jens-Christian Stoetzer & Nils Urbach & Florian Lennart Weiß & Vincent Gramlich & Tobias Guggenberger, 2025. "Designing the future of bond markets: Reducing transaction costs through tokenization," Electronic Markets, Springer;IIM University of St. Gallen, vol. 35(1), pages 1-22, December.
    • Handle: RePEc:spr:elmark:v:35:y:2025:i:1:d:10.1007_s12525-025-00753-3
    DOI: 10.1007/s12525-025-00753-3
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    References listed on IDEAS

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    More about this item

    Keywords

    Bonds; Design science research; Transaction cost theory; Blockchain;
    All these keywords.

    JEL classification:

    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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