IDEAS home Printed from https://ideas.repec.org/a/sbp/journl/25.html
   My bibliography  Save this article

The Importance of Domestic Institutional Investors in Pakistan’s Growing Bond Market

Author

Listed:
  • Marshall Mays

    (Emerging Alpha Advisors Limited)

Abstract

As financial systems migrate from a bank-centric model to one that includes bond markets as a companion channel for credit intermediation, they face challenges from both institutional inertia and in learning what works best locally, in a way that limits the risks of experimentation. While many countries learned too much of one of the many lessons from the 1997- 98 Asian experience, they have failed to learn an unavoidable corollary: domestic institutional investors (IIs) must be the pillars of domestic capital markets. Developing the risk-management capability of these domestic IIs has been slower than other aspects of capital-market development throughout Asia. This has been, in part, because the government has a conflict of interest with these IIs, since it is the issuer of its own sovereign bond and the regulator of the market. As Pakistan continues its own market development, it would do well to focus on this area – the demand side rather than just the supply side. This paper explores the experience of others and ways in which Pakistan might proceed.

Suggested Citation

  • Marshall Mays, 2007. "The Importance of Domestic Institutional Investors in Pakistan’s Growing Bond Market," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 3, pages 89-106.
    • Handle: RePEc:sbp:journl:25
    as

    Download full text from publisher

    File URL: http://www.sbp.org.pk/research/bulletin/2007/vol3/Domestic-Institutional-Investors.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Peter J. Montiel, 2003. "Development of Financial Markets and Macroeconomic Policy," Journal of African Economies, Centre for the Study of African Economies, vol. 12(Supplemen), pages 12-52, September.
    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.
    3. Mr. Pipat Luengnaruemitchai & Ms. Li L Ong, 2005. "An Anatomy of Corporate Bond Markets: Growing Pains and Knowledge Gains," IMF Working Papers 2005/152, International Monetary Fund.
    4. Caprio, Gerard, Jr & Demirguc-Kunt, Asli, 1998. "The Role of Long-Term Finance: Theory and Evidence," The World Bank Research Observer, World Bank, vol. 13(2), pages 171-189, August.
    5. Hart, Oliver & Moore, John, 1995. "Debt and Seniority: An Analysis of the Role of Hard Claims in Constraining Management," American Economic Review, American Economic Association, vol. 85(3), pages 567-585, June.
    6. Hakansson, Nils H., 1999. "The Role of a Corporate Bond Market in an Economy -- and in Avoiding Crises," Research Program in Finance, Working Paper Series qt6sq4c6g0, Research Program in Finance, Institute for Business and Economic Research, UC Berkeley.
    7. Robert McCauley & Eli Remolona, 2000. "Size and liquidity of government bond markets," BIS Quarterly Review, Bank for International Settlements, November.
    8. Nils H. Hakansson, 1999. "The Role of a Corporate Bond Market in an Economy - and in Avoiding Crises," Research Program in Finance Working Papers RPF-287, University of California at Berkeley.
    Full references (including those not matched with items on IDEAS)

    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. 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.
    2. Guorong Jiang & Nancy Tang & Eve Law, 2002. "The costs and benefits of developing debt markets: Hong Kong's experience," BIS Papers chapters, in: Bank for International Settlements (ed.), The development of bond markets in emerging economies, volume 11, pages 103-114, Bank for International Settlements.
    3. Biswa Nath Bhattacharyay, 2011. "Bond Market Development in Asia : An Empirical Analysis of Major Determinants," Finance Working Papers 23236, East Asian Bureau of Economic Research.
    4. Oke Michael O. & Dada Oluwabunmi & Aremo Nelson O., 2021. "Impact of Bond Market Development on the Growth of the Nigerian Economy," Folia Oeconomica Stetinensia, Sciendo, vol. 21(1), pages 60-75, June.
    5. Noor Nahar Begum & Md Aktar Kamal, 2018. "Exploring the Key Factors Affecting Development of Bond Market in Bangladesh: An Application of Exploratory Factor Analysis (EFA)," International Journal of Economics and Financial Issues, Econjournals, vol. 8(5), pages 266-275.
    6. Bhattacharyay, Biswa Nath, 2013. "Determinants of bond market development in Asia," Journal of Asian Economics, Elsevier, vol. 24(C), pages 124-137.
    7. International Monetary Fund, 2005. "Mauritius: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2005/280, International Monetary Fund.
    8. Endo, Tadashi, 2008. "Broadening the offering choice of corporate bonds in emerging markets : cost-effective access to debt capital," Policy Research Working Paper Series 4655, The World Bank.
    9. Sensarma, Rudra & Bhattacharyya, Indranil, 2016. "The impact of monetary policy on corporate bonds in India," Journal of Policy Modeling, Elsevier, vol. 38(3), pages 587-602.
    10. Yoko Furukawa, 2009. "Equity market and foreign capital," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 349-358, February.
    11. Barry Eichengreen & Pipat Luengnaruemitchai, 2004. "Why Dones't Asia have the biger bond markets," Working Papers 242004, Hong Kong Institute for Monetary Research.
    12. Barry Eichengreen & Pipat Luengnaruemitchai, 2006. "Why doesn’t Asia have bigger bond markets?," BIS Papers chapters, in: Bank for International Settlements (ed.), Asian bond markets: issues and prospects, volume 30, pages 40-77, Bank for International Settlements.
    13. World Bank & International Monetory Fund, 2001. "Developing Government Bond Markets : A Handbook," World Bank Publications - Books, The World Bank Group, number 13865.
    14. Sommer, Christoph, 2021. "The impact of patient capital on job quality, investments and firm performance: Cross-country evidence on long-term finance," IDOS Discussion Papers 6/2021, German Institute of Development and Sustainability (IDOS).
    15. Park,Haelim & Ruiz Ortega,Claudia & Tressel,Thierry, 2015. "Determinants of long-term versus short-term bank credit in EU countries," Policy Research Working Paper Series 7436, The World Bank.
    16. Yoko Furukawa, 2009. "Equity market and foreign capital," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(1), pages 349-358, February.
    17. Ngene, Geoffrey M. & Lee Kim, Yea & Wang, Jinghua, 2019. "Who poisons the pool? Time-varying asymmetric and nonlinear causal inference between low-risk and high-risk bonds markets," Economic Modelling, Elsevier, vol. 81(C), pages 136-147.
    18. Christoph Sommer, 2024. "The Impact of Long-Term Finance on Job Quality, Investments and Firm Performance: Cross-Country Evidence," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(4), pages 747-776, August.
    19. Demirgüç-Kunt, Asli & Martinez Peria, Maria Soledad & Tressel, Thierry, 2020. "The global financial crisis and the capital structure of firms: Was the impact more severe among SMEs and non-listed firms?," Journal of Corporate Finance, Elsevier, vol. 60(C).
    20. Debora Revoltella, 2001. "Financing Enterprises in the Czech Republic: Debt and Firm-specific Variables," Economic Change and Restructuring, Springer, vol. 34(3), pages 231-246, October.

    More about this item

    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:sbp:journl:25. See general information about how to correct material in RePEc.

    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: Faisal Saleem (email available below). General contact details of provider: https://edirc.repec.org/data/sbpgvpk.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.