Capital market development and emergence of institutional investors in the Asia-Pacific region

Hans Genberg

Asia-Pacific Development Journal, 2015, vol. 22, issue 2, 1-26

Abstract: Bank credit is traditionally the largest source of finance in the Asia-Pacific region, but the role of capital markets has increased over time. There is substantial heterogeneity across countries. For capital markets to develop further, macroeconomic stability, strong property rights and enforcement of securities laws have been identified as particularly important considerations, together with building a state-of-the-art financial infrastructure, including trading platforms and clearing and settlement systems, and transparent information-sharing arrangements. Institutional investors tend to have long-investment horizons and, as such, contribute to the stability of the local market. It may therefore be appropriate to explore ways to increase their presence in the domestic bond and equity markets. Two possible approaches to accomplish this are to promote savings through national pension funds and insurance companies and to encourage the participation of foreign institutional investors in the domestic market by making it more accessible to them while at the same time being mindful of the risks to domestic financial stability associated with greater openness to international capital flows. Policymakers may also explore ways to take advantage of the emerging field of impact investment to support funding for projects that are intended to generate environmental and social impacts.

Keywords: Capital market development; institutional investors; impact investment; Asia-Pacific region (search for similar items in EconPapers)
JEL-codes: F21 F34 G15 G23 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Working Paper: Capital Market Development and Emergence of Institutional Investors in the Asia-Pacific Region (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:unt:jnapdj:v:22:y:2015:i:2:p:1-26

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