Do Local Currency Bond Markets Enhance Financial Stability?

Donghyun Park, Kwanho Shin and Shu Tian ()

Working Papers from eSocialSciences

Abstract: This paper empirically tests conventional wisdom on the stabilizing effect of LCBMs. To do so, it analyses and compare the financial vulnerability of developing countries during two episodes of financial stress—global financial crisis and taper tantrum. During the two episodes, the paper finds a negative association between the growth of LCBMs and the degree of currency depreciation in emerging economies. Similar association is found of bank loans but not for the stock market.

Keywords: eSS; Asian financial crisis; bonds; currency mismatch; developing countries; financial stability; local currency bond markets; maturity mismatch. (search for similar items in EconPapers)
Date: 2018-10
Note: Institutional Papers
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Do Local Currency Bond Markets Enhance Financial Stability? (2018)
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