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The Theory and Empirics of Financial Development in the East Asian Bond Markets

The Theory and Empirics of Financial Development in the East Asian Bond Markets AbstractThe Asian financial crisis marked a turning point in financial development in East Asia that brought the development of bond markets within the focus of policy-makers. This paper tracks the benefits of an advanced bond market, the current state of the East Asian corporate and government bond markets and their rapid evolution since the Asian crisis. Subsequently, a multivariate model is used to determine the endogenous economic and institutional factors that drove growth in the region’s bond markets. The following findings may be noted: (1) growth in the government bond market was driven by the monetary sterilisation efforts of East Asian central banks in order to cope with excessive liquidity, (2) the government bond market may crowd out the corporate bond market, and (3) the corporate bond market grew particularly strongly during the global financial crisis. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Vienna Journal of East Asian Studies de Gruyter

The Theory and Empirics of Financial Development in the East Asian Bond Markets

Kemetmüller, Thomas
Vienna Journal of East Asian Studies , Volume 5 (1): 32 – Dec 1, 2014
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Publisher
de Gruyter
Copyright
© 2018 Thomas Kemetmüller, published by Sciendo
ISSN
2521-7038
eISSN
2521-7038
DOI
10.2478/vjeas-2014-0003
Publisher site
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Abstract

AbstractThe Asian financial crisis marked a turning point in financial development in East Asia that brought the development of bond markets within the focus of policy-makers. This paper tracks the benefits of an advanced bond market, the current state of the East Asian corporate and government bond markets and their rapid evolution since the Asian crisis. Subsequently, a multivariate model is used to determine the endogenous economic and institutional factors that drove growth in the region’s bond markets. The following findings may be noted: (1) growth in the government bond market was driven by the monetary sterilisation efforts of East Asian central banks in order to cope with excessive liquidity, (2) the government bond market may crowd out the corporate bond market, and (3) the corporate bond market grew particularly strongly during the global financial crisis.

Journal

Vienna Journal of East Asian Studies – de Gruyter

Published: Dec 1, 2014

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