IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/25549.html
   My bibliography  Save this paper

Chinese Bond Market and Interbank Market

Author

Listed:
  • Marlene Amstad
  • Zhiguo He

Abstract

Over the past twenty years, especially the past decade, China has taken enormous strides to develop its bond market as an integral step of financial reform. This paper aims to provide the most up-to-date overview of Chinese bond markets, by highlighting two distinct and largely segmented markets: Over-the-Counter based interbank market, and centralized exchange market. We explain various bond instruments traded in these two markets, highlighting their inherent connection with the banking system, and many multi-layer regulatory bodies who are interacting with each other in an intricate way. We also covers the credit ratings and rating agencies in Chinese market, and offer an account of ever-rising default incidents in China starting 2014. Finally, we discuss the recent regulatory tightening of shadow banking since late 2017 and its impact on bond investors, and the forces behind the internalization of Chinese bond markets in the near future.

Suggested Citation

  • Marlene Amstad & Zhiguo He, 2019. "Chinese Bond Market and Interbank Market," NBER Working Papers 25549, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:25549
    Note: AP CF IFM ITI
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w25549.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chen, Zhuo & He, Zhiguo & Liu, Chun, 2020. "The financing of local government in China: Stimulus loan wanes and shadow banking waxes," Journal of Financial Economics, Elsevier, vol. 137(1), pages 42-71.
    2. Huang, Yi & Panizza, Ugo & Portes, Richard, 2018. "Corporate foreign bond issuance and interfirm loans in China," CEPR Discussion Papers 12865, C.E.P.R. Discussion Papers.
    3. Xianfeng Jiang & Frank Packer, 2017. "Credit ratings of domestic and global agencies: What drives the differences in China and how are they priced?," BIS Working Papers 648, Bank for International Settlements.
    4. Amihud, Yakov, 2002. "Illiquidity and stock returns: cross-section and time-series effects," Journal of Financial Markets, Elsevier, vol. 5(1), pages 31-56, January.
    5. Torsten Ehlers & Steven Kong & Feng Zhu, 2018. "Mapping shadow banking in China: structure and dynamics," BIS Working Papers 701, Bank for International Settlements.
    6. Poon, Winnie P.H. & Chan, Kam C., 2008. "An empirical examination of the informational content of credit ratings in China," Journal of Business Research, Elsevier, vol. 61(7), pages 790-797, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chen, Bing & Li, Li & Peng, Fei & Anwar, Sajid, 2020. "Risk contagion in the banking network: New evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    2. Dragon Yongjun Tang, 2019. "Comments on "Measuring corporate bond liquidity in emerging markets: price- vs quantity-based measures"," BIS Papers chapters, in: Bank for International Settlements (ed.), Asia-Pacific fixed income markets: evolving structure, participation and pricing, volume 102, pages 63-66, Bank for International Settlements.
    3. Chen, Zhuo & He, Zhiguo & Liu, Chun, 2020. "The financing of local government in China: Stimulus loan wanes and shadow banking waxes," Journal of Financial Economics, Elsevier, vol. 137(1), pages 42-71.
    4. Franklin Allen & Jun “QJ” Qian & Meijun Qian, 2019. "A Review of China's Institutions," Annual Review of Financial Economics, Annual Reviews, vol. 11(1), pages 39-64, December.
    5. Zhang, Xiaoqian & Wang, Zhiwei, 2020. "Marketization vs. market chase: Insights from implicit government guarantees," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 435-455.
    6. Hanming Fang & Yongqin Wang & Xian Wu, 2020. "The Collateral Channel of Monetary Policy: Evidence from China," PIER Working Paper Archive 20-008, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    7. Jean-Edouard Colliard & Thierry Foucault & Peter Hoffmann, 2018. "Inventory Management, Dealers' Connections, and Prices in OTC Markets," Working Papers hal-01933855, HAL.
    8. Bank for International Settlements, 2020. "US dollar funding: an international perspective," CGFS Papers, Bank for International Settlements, number 65, June.
    9. Hu, Xiaolu & Huang, Haozhi & Pan, Zheyao & Shi, Jing, 2019. "Information asymmetry and credit rating: A quasi-natural experiment from China," Journal of Banking & Finance, Elsevier, vol. 106(C), pages 132-152.
    10. Yi Ding & Wei Xiong & Jinfan Zhang, 2020. "Issuance Overpricing of China’s Corporate Debt Securities," NBER Working Papers 26815, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Zhuo & He, Zhiguo & Liu, Chun, 2020. "The financing of local government in China: Stimulus loan wanes and shadow banking waxes," Journal of Financial Economics, Elsevier, vol. 137(1), pages 42-71.
    2. Hu, Xiaolu & Huang, Haozhi & Pan, Zheyao & Shi, Jing, 2019. "Information asymmetry and credit rating: A quasi-natural experiment from China," Journal of Banking & Finance, Elsevier, vol. 106(C), pages 132-152.
    3. Yi Huang & Jianjun Miao & Pengfei Wang, 2019. "Saving China’s Stock Market?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(2), pages 349-394, June.
    4. Shugo Yamamoto, 2020. "Global Liquidity,Offshore Bond Issuance and Shadow Banking in China," Discussion Papers 2011, Graduate School of Economics, Kobe University.
    5. Feng, Xu & Lu, Lei & Xiao, Yajun, 2020. "Shadow banks, leverage risks, and asset prices," Journal of Economic Dynamics and Control, Elsevier, vol. 111(C).
    6. Manuel Ammann & Philipp Horsch & David Oesch, 2016. "Competing with Superstars," Management Science, INFORMS, vol. 62(10), pages 2842-2858, October.
    7. Johannes A. Skjeltorp & Bernt Arne Ødegaard, 2009. "The information content of market liquidity: An empirical analysis of liquidity at the Oslo Stock Exchange?," Working Paper 2009/26, Norges Bank.
    8. Caginalp, Gunduz & DeSantis, Mark, 2017. "Does price efficiency increase with trading volume? Evidence of nonlinearity and power laws in ETFs," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 467(C), pages 436-452.
    9. Acharya, Viral V. & Johnson, Timothy C., 2010. "More insiders, more insider trading: Evidence from private-equity buyouts," Journal of Financial Economics, Elsevier, vol. 98(3), pages 500-523, December.
    10. Pastor, Lubos & Stambaugh, Robert F., 2003. "Liquidity Risk and Expected Stock Returns," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 642-685, June.
    11. Constantinos Antoniou & John A. Doukas & Avanidhar Subrahmanyam, 2016. "Investor Sentiment, Beta, and the Cost of Equity Capital," Management Science, INFORMS, vol. 62(2), pages 347-367, February.
    12. Auguste, Sebastian & Dominguez, Kathryn M.E. & Kamil, Herman & Tesar, Linda L., 2006. "Cross-border trading as a mechanism for implicit capital flight: ADRs and the Argentine crisis," Journal of Monetary Economics, Elsevier, vol. 53(7), pages 1259-1295, October.
    13. Leon Zolotoy & Don O’Sullivan & Keke Song, 2021. "The Role of Ethical Standards in the Relationship Between Religious Social Norms and M&A Announcement Returns," Journal of Business Ethics, Springer, vol. 170(4), pages 721-742, May.
    14. Chang, Sanders S. & Wang, F. Albert, 2015. "Adverse selection and the presence of informed trading," Journal of Empirical Finance, Elsevier, vol. 33(C), pages 19-33.
    15. Cameron Truong, 2013. "The January effect, does options trading matter?," Australian Journal of Management, Australian School of Business, vol. 38(1), pages 31-48, April.
    16. Sirio Aramonte & Wenqian Huang, 2019. "OTC derivatives: euro exposures rise and central clearing advances," BIS Quarterly Review, Bank for International Settlements, December.
    17. Li, Xiao-Ming, 2017. "New evidence on economic policy uncertainty and equity premium," Pacific-Basin Finance Journal, Elsevier, vol. 46(PA), pages 41-56.
    18. AltInkIlIç, Oya & Hansen, Robert S., 2009. "On the information role of stock recommendation revisions," Journal of Accounting and Economics, Elsevier, vol. 48(1), pages 17-36, October.
    19. Hu, Xiaolu & Shi, Jing & Wang, Lafang & Yu, Jing, 2020. "Foreign ownership in Chinese credit ratings industry: Information revelation or certification?," Journal of Banking & Finance, Elsevier, vol. 118(C).
    20. Turan G. Bali & Robert F. Engle & Yi Tang, 2017. "Dynamic Conditional Beta Is Alive and Well in the Cross Section of Daily Stock Returns," Management Science, INFORMS, vol. 63(11), pages 3760-3779, November.

    More about this item

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • G2 - Financial Economics - - Financial Institutions and Services
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:25549. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.