Why Doesn't Asia Have Bigger Bond Markets?

Barry Eichengreen and Pipat Luengnaruemitchai

No 10576, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Asia's underdeveloped bond markets and dependence on bank finance have been topics of concern since the crisis of 1997-8. In this paper we document that the slow development of Asian bond markets is a phenomenon with multiple dimensions. Larger country size, stronger institutions, less volatile exchange rates, and more competitive banking sectors tend to be positively associated with bond market capitalization. Asian countries' strong fiscal balances, while admirable on other grounds, have not been conducive to the growth of government bond markets. The results suggest that the region's structural characteristics and macroeconomic and financial policies account fully for differences in bond market development between Asia and the rest of the world. Once one controls for these characteristics and policies, in other words, there is no residual Asia effect.'

JEL-codes: I20 J24 (search for similar items in EconPapers)
Date: 2004-06
New Economics Papers: this item is included in nep-fin, nep-ifn, nep-mfd and nep-sea
Note: CF IFM
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Citations: View citations in EconPapers (99)

Published as 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.

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