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What drove the corporate bond markets in Asia after 1995?

Author

Listed:
  • Oskar Kowalewski

    (IÉSEG School of Management and LEM CNRS (UMR 9221), Paris, France; Vistula University, Warsaw, Poland)

  • Paweł Pisany

    (Institute of Economics of the Polish Academy of Science, Warsaw, Poland. Collegium of World Economy, Warsaw School of Economics, Warsaw, Poland.)

Abstract

We investigate the development of corporate bond markets in 10 Asian countries from 1995 to 2014. Using data on outstanding value and total issue of bonds by financial and non-financial companies, we confirm that macroeconomic and institutional factors are related to the depth of the corporate bond market. We show that creditor rights and institutional quality are important in explaining the size of outstanding value and issuance of corporate bonds. Furthermore, we determine a strong positive association between the level of domestic credit and the outstanding value and issue of corporate bonds. From the results, we surmise that there is a positive relationship between the development of the corporate bond market and the banking sector. These findings indicate that increased demand for bank loans induced the issuance of bonds by financial institutions, which, in turn, might have led to the development of corporate bond markets in Asia. Finally, we document that the development of corporate bond markets might have helped mitigate the outcome of the financial crisis of 2008 in Asia.

Suggested Citation

  • Oskar Kowalewski & Paweł Pisany, 2018. "What drove the corporate bond markets in Asia after 1995?," NBP Working Papers 285, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:285
    Note: We would like to thank the participants of the IFABS Asia conference and seminars at the IÉSEG School of Management, Warsaw School of Economics and University of Warsaw (WES) for their comments.
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    References listed on IDEAS

    as
    1. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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    More about this item

    Keywords

    corporate bond market; bond issuance; crisis; banking sector; Asia;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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