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What Slice of the Pie? The Corporate Bond Market Boom in Emerging Economies

Author

Listed:
  • Diana Ayala
  • Milan Nedeljkoviæ

    (National Bank of Serbia)

  • Christian Saborowski

Abstract

This paper studies the determinants of shifts in debt composition among emerging market non-financial corporates. We show that institutions and macro fundamentals create an enabling environment for bond market development. During the recent boom episode, however, global cyclical factors accounted for most of the variation of bond shares in total corporate debt. The sensitivity to global factors appears to vary with relative bond market size rather than local fundamentals. Foreign bank linkages help explain why bond markets increasingly substituted for banks in channeling liquidity to EMs. Our results highlight the risk of capital flow reversal in EMs that benefited from the upturn in the global financial cycle mostly due to their liquid markets rather than strong fundamentals.

Suggested Citation

  • Diana Ayala & Milan Nedeljkoviæ & Christian Saborowski, 2015. "What Slice of the Pie? The Corporate Bond Market Boom in Emerging Economies," Working papers 30, National Bank of Serbia.
    • Handle: RePEc:nsb:wpaper:30
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    More about this item

    Keywords

    Bond markets; Capital flows; Emerging Markets;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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