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Development of Asian Bond Markets and Challenges: Keys to Market Expansion

Satoshi Shimizu
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Satoshi Shimizu: Senior Economist, Economics Department, The Japan Research Institute, Limited

Public Policy Review, 2018, vol. 14, issue 5, 955-1000

Abstract: Asian bond markets have expanded significantly in terms of quantity and have grown more mature than before in terms of quality. However, the degree of bond market development varies widely across countries, and the formation of well-balanced financial systems has yet to be completed. In South Korea and Malaysia, which have corporate bond markets that are relatively well developed, laws, regulations and market infrastructure have been established as a result of ongoing market development efforts since before the Asian financial crisis of 1997, and there are many bond issuers and investors. On the other hand, in other countries such as the Philippines and Indonesia, where market development has lagged behind, the issuance of corporate bonds started in earnest only in the mid-2000s. As a result, policy measures for market development have not necessarily been implemented sufficiently, and there are relatively few issuers and investors. In addition, as these countries have structural problems in their financial systems, it is difficult to change the situation in which banks act as the main providers of finance. In the future, it will be necessary to devote efforts to market development and continue to hold discussions on the role of the corporate bond market. Meanwhile, concerning countries whose corporate bond markets are well developed as well, there remain many problems that must be corrected, such as the ill-balanced mix of issuer industries and the underdevelopment of investors’ investment skills, leaving room for further market development.

Keywords: Asian bond markets; Asian Bond Markets Initiative (ABMI); Asian Bonds Online; Credit Guarantee and Investment Facility (CGIF); ASEAN+3 Bond Market Forum (ABMF); factors of bond market development; financial system; institutional investors (search for similar items in EconPapers)
JEL-codes: F36 G23 (search for similar items in EconPapers)
Date: 2018
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