Evolving Domestic Bond Markets and Financial Deepening in Asia

Abstract

The principal thesis of this paper is growth and development of the debt securities markets in Asia, which resulted in financial deepening. In the post-Asian financial crisis period development of Asian currency dominated long-term bond markets was given a high priority. Conception and launch of the ABMI initiative proved to be exceedingly meaningful in this regard. Additionally, with an objective to develop well-capitalized regional bond markets, the EMEAP group of central banks launched the Asian Bond Fund or the ABF1 and ABF2. This process was exceedingly helpful in providing opportunities for learning the game of issuing and investing in bonds. In the post-Asian crisis phase central bankers and finance ministries in several Asian economies were successful in their efforts to develop domestic or local currency bond markets, which included both the government and corporate bond sectors. The paper discusses both the government and corporate bond markets in Asia. During the decade of the 2000s domestic debt securities markets in several Asian economies expanded dramatically. This paper shows that the global financial crisis and the Eurozone sovereign debt crisis have had both direct and indirect impacts over the global economy. However, statistical data show that the global financial crisis (2007–2009) had only a minor impact on the Asian bond issue trend.