A Quantitative Assessment of Credit Guarantee Scheme in Asian Bond Markets

Young-Joon Park () and Dong-Eun Rhee
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Young-Joon Park: Ajou University, Department of Economics

No 11-7, Working Papers from Korea Institute for International Economic Policy

Abstract: This paper reviews current development of the Asian Bond Markets Initiative (ABMI) and addresses the macroeconomic effects of credit guarantee schemes through the Credit Guarantee Investment Facility (CGIF) along with the ABMI. The findings from international macroeconomic simulations include that (i) even though East Asian financial cooperation upgrades some countries' credit fundamentals, it helps increase both the corresponding countries' real GDP and East Asia's regional real GDP, and (ii) this effect becomes greater as credit rating upgrade happens to more ASEAN 3 member countries in East Asia. These results strongly recommend that ASEAN 3 efforts along with the ABMI should move toward building local currency bond markets on the existing achievements. For the ABMI to be more effective, moreover, the importance of regional prudential supervision and regional market infrastructure is given with greater emphasis.

Keywords: ABMI; CGIF; Asian Bond Markets; GIMF Model (search for similar items in EconPapers)
JEL-codes: F36 F47 F55 O16 R58 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2011-12-30
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Citations: View citations in EconPapers (1)

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