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Why Doesn't Asia Have Bigger Bond Markets?

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Author Info
Barry Eichengreen
Pipat Luengnaruemitchai

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Abstract

Asia's underdeveloped bond markets and dependence on bank finance have been topics of concern since the crisis of 1997-8. In this paper we document that the slow development of Asian bond markets is a phenomenon with multiple dimensions. Larger country size, stronger institutions, less volatile exchange rates, and more competitive banking sectors tend to be positively associated with bond market capitalization. Asian countries' strong fiscal balances, while admirable on other grounds, have not been conducive to the growth of government bond markets. The results suggest that the region's structural characteristics and macroeconomic and financial policies account fully for differences in bond market development between Asia and the rest of the world. Once one controls for these characteristics and policies, in other words, there is no residual Asia effect.'

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10576.

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Date of creation: Jun 2004
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Handle: RePEc:nbr:nberwo:10576

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I20 - Health, Education, and Welfare - - Education - - - General
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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References listed on IDEAS
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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  2. Richard J. Herring & Nathporn Chatusripitak, 2000. "The Case of the Missing Market: The Bond Market and Why It Matters for Financial Development," Center for Financial Institutions Working Papers 01-08, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
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  5. Galina Hale, 2003. "Bonds or Loans? The Effect of Macroeconomic Fundamentals," Cowles Foundation Discussion Papers 1403, Cowles Foundation, Yale University, revised Sep 2005. [Downloadable!]
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  6. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear Of Floating," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 379-408, May. [Downloadable!] (restricted)
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  7. John D. Burger & Francis E. Warnock, 2004. "Foreign participation in local-currency bond markets," International Finance Discussion Papers 794, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  8. Benston, George J, 1994. "Universal Banking," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 121-43, Summer. [Downloadable!] (restricted)
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  10. John D. Burger & Francis E. Warnock, 2003. "Diversification, original sin, and international bond portfolios," International Finance Discussion Papers 755, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  11. Garry J. Schinasi & T. Todd Smith, 1998. "Fixed-Income Markets in the United States, Europe, and Japan-Some Lessons for Emerging Markets," IMF Working Papers 98/173, International Monetary Fund.
  12. Robert N McCauley, 2003. "Unifying government bond markets in East Asia," BIS Quarterly Review, Bank for International Settlements, December. [Downloadable!]
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  14. Thorsten Beck & Asli Demirguc-Kunt & Ross Levine, 2002. "Law, Endowment, and Finance," NBER Working Papers 9089, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Barry Eichengreen & Ashoka Mody, 1998. "What Explains Changing Spreads on Emerging-Market Debt: Fundamentals or Market Sentiment?," NBER Working Papers 6408, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Veronica Cacdac Warnock & Francis E. Warnock, 2007. "Markets and Housing Finance," NBER Working Papers 13081, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Alexander D. Rothenberg & Francis E. Warnock, 2006. "Sudden Flight and True Sudden Stops," NBER Working Papers 12726, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Kim, Soyoung & Lee, Jong-Wha & Shin, Kwanho, 2006. "Regional and Global Financial Integration in East Asia," MPRA Paper 695, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  4. Philip R. Lane & Sergio L. Schmukler, 2006. "The international financial integration of China and India," Proceedings, Federal Reserve Bank of San Francisco, issue Jun. [Downloadable!]
    Other versions:
  5. Galina Hale & Mark M. Spiegel, 2008. "Who drove the boom in euro-denominated bond issues?," Working Paper Series 2008-20, Federal Reserve Bank of San Francisco. [Downloadable!]
  6. Veronica Cacdac Warnock & Francis E. Warnock, 2008. "Markets and Housing Finance," Working Papers 032008, Hong Kong Institute for Monetary Research. [Downloadable!]
  7. Jamel Boukhatem, 2009. "Essai sur les déterminants empiriques de développement des marchés obligataires," EconomiX Working Papers 2009-32, University of Paris West - Nanterre la Défense, EconomiX. [Downloadable!]
  8. Paul Mizen & Serafeim Tsoukas, 2008. "Evidence on the External Finance Premium from the US and Emerging Asian Corporate Bond Markets," Working Papers 142008, Hong Kong Institute for Monetary Research. [Downloadable!]
  9. Barry Eichengreen & Pipat Luengnaruemitchai, 2006. "Bond Markets as Conduits for Capital Flows: How Does Asia Compare?," NBER Working Papers 12408, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. Tony Latter, 2008. "What Future for the Hong Kong Dollar Corporate Bond Market?," Working Papers 192008, Hong Kong Institute for Monetary Research. [Downloadable!]
  11. Paul Lejot & Douglas Arner & Liu Qiao, 2004. "Making Markets: Reforms to Strengthen Asia's Debt Capital Markets," Working Papers 132004, Hong Kong Institute for Monetary Research. [Downloadable!]
  12. Janet L. Yellen, 2007. "The Asian financial crisis ten years later: assessing the past and looking to the future," Speech, Federal Reserve Bank of San Francisco, issue Feb 6. [Downloadable!]
  13. D. Johannes Juttner & David Chung & Wayne Leung, 2004. "Emerging Market Bond Returns – An Investor Perspective," Research Papers 0406, Macquarie University, Department of Economics. [Downloadable!]
  14. Alexander D. Rothenberg & Francis E. Warnock, 2007. "Sudden Flight and True Sudden Stops," The Institute for International Integration Studies Discussion Paper Series iiisdp187, IIIS. [Downloadable!]
  15. Li L. Ong & Pipat Luengnaruemitchai, 2005. "An Anatomy of Corporate Bond Markets: Growing Pains and Knowledge Gains," IMF Working Papers 05/152, International Monetary Fund. [Downloadable!]
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