Corporate Bond Market Development Research Articles

CORPORATE BOND MARKET IN INDIA: A REVIEW OF FACTORS LIMITING THE DEVELOPMENT

The corporate bond market helps the companies raise long-term finance, which is essential external source of capital. The Indian corporate bond market is still in its early stages of development, and as a result, it lacks the depth found in more mature markets. This paper aims to understand the factors that have limited the development of the corporate bond market in India. In addition, the paper examines the requirements for corporate bond market development, where the government bond market is doing quite well. This paper is designed as a literature review previously attempted to elaborate on the current state of corporate bond markets. The research is limited to previous studies and secondary data. Based on the literature review from previous studies and recently available market statistics, the main factors that constrain the development of Indian corporate bond markets are performance metrics, corporate governance, opacity to information and credit rating mechanism, financial infrastructure, and cost associated with issuance influence the corporate bond markets. The Indian government and Reserve bank have simultaneously tried to develop the corporate bond market.

The growth of the real estate corporate bond market in Vietnam: the role of investor sentiment

PurposeThis paper aims to examine the effects of investor sentiment on the development of the real estate corporate bond market in Vietnam.Design/methodology/approachThe research uses an autoregressive distributed lag (ARDL) model with quarterly data. Additionally, the study employs Google Trends search data (GVSI) related to topics such as “Real Estate” and “Corporate Bond” to construct a sentiment index.FindingsThe empirical outcomes reveal that real estate market sentiment improves the growth of the real estate corporate bond market, while stock market sentiment reduces it. Also, there is evidence of a long-run negative effect of corporate bond market sentiment on the total value of real estate bond issuance. Further empirical research evidences the short-term effect of sentiment and economic factors on corporate bond development in the real estate industry.Research limitations/implicationsDue to difficulties in collecting data, this paper has the limited sample of 54 valid quarterly observations. Moreover, the sentiment index based on Google search volume data only reflects the interest level of investors, not their attitudes.Practical implicationsThese results yield important implications for policymakers in respect of strengthening the corporate bond market platform and maintaining stability in macroeconomic and monetary policies in order to promote efficient and sustainable market development.Social implicationsThe study offers some suggestions for regulators and governments to improve the real estate corporate bond market.Originality/valueThis is the first quantitative study to examine the effect of sentiment factors on real estate corporate bond development in Vietnam.

Provision of rating and analytical products to participants of the Russian corporate bond market as a factor in the development of the national financial market

Subject. The article addresses the prohibition, enshrined in Russian legislation, on preparation and publication of analytical products by appraisers as a factor that reduces the effectiveness and hinders the development of the Russian corporate bond market. Objectives. The aim is to update the problem of unequal conditions and opportunities for participation of credit rating agencies, appraisers, and investment advisors in providing rating and analytical products to the Russian corporate bond market actors. Methods. We employ methods of systematization, comparison, and systems analysis of interactions between subjects of the corporate bond market, which are perceived as unbalanced due to the ban on the preparation and publication of analytical products by appraisers. Results. The paper underpins the economic expediency of lifting the ban on the preparation and publication of analytical products by appraisers that is fixed in the Russian legislation. The suggestion may be of interest to the subjects of the securities market. Conclusions. It is advisable that the basic concepts for the development of the financial market, the securities market, the corporate bond market, would include services of developers of rating and analytical products, i.e. credit rating agencies, appraisers, and investment advisers, in the preparation for the reorganization of the market. Lifting the ban on the preparation and publication of analytical products by appraisers, enshrined in Russian legislation, will have a positive impact on solving the problem of information disclosure in the corporate bond market.

Phát triển bền vững thị trường trái phiếu doanh nghiệp trong nền kinh tế thị trường ở Việt Nam hiện nay: Góc nhìn từ các bên liên quan

The sustainable development of Vietnamese corporate bond market will contribute to promoting the development of the capital market and create an additional channel of capital mobilization for the economy and businesses. From the perspective of stakeholders, this study uses statistical data on the operation of corporate bond market in Vietnam during the period 2018-2022 to analyze its development and point out its limitations. Finally, a number of solutions are proposed for involved parties to promote the sustainable development of Vietnamese corporate bond market and turn it into the main capital mobilization channel for businesses in the near future

Going Global or Staying Local: Determinants of Domestic and International Corporate Bond Issues in the Baltics

In the period 2017-2022, there has been a notable growth in international bond placements by Baltic companies, which is distinct from corporate bond issuance in the European Economic Area. While the Baltic governments have demonstrated an increased focus on the corporate bond market development – the pan-Baltic Capital Markets Union launched in 2017 and covered bond law as adopted in Latvia in 2021, those activities are not directly linked to the ongoing shift to international corporate borrowing. In the academic literature, the determinants affecting corporate bond issuance are getting certain attention while studying separately the country-level determinants and the firm-level determinants, which are further split into domestic and international corporate bond issuance. For the Baltic countries, rare academic research has focused on the corporate bond market development of an individual Baltic country. 
 This paper aims to discover the determinants for domestic and international corporate bond issuance of Baltic companies. While providing theoretical insight into corporate bond issuance rationale for both domestic and international placements, the paper focuses on factors that have contributed to firms choosing to issue bonds internationally. The methods applied in this study are scientific publication analysis, document analysis, expert survey, in-depth interviews, and statistical data analysis. For the statistical analysis, macroeconomic data was acquired from Cbonds, The World Bank, and International Monetary Fund databases in combination with company-specific data gathered from Nasdaq CSD, Orbis, Lursoft, Storybook, and Rekvizitai. The authors have employed a panel regression model for domestic and international bond issuance, and probit regression for all issued bonds in the Baltics from 2003-2022 to estimate the probability of pursuing bond financing internationally.
 The findings of this paper indicate that in the Baltics the main firm-level determinants for domestic corporate bond issuance are the company’s financial performance, its geographic exposure, documentation and listing costs, and access to alternative funding sources; on the country-level, the determinants are the share of sovereign international bonds of GDP, corruption perception, and exports as a share of GDP. For issuing international corporate bonds, the main determinants on the firm-level are bond placement size, company size, equity ratio, a satisfactory credit rating, and appropriate yields in the context of higher competition for international investor attention; on the country-level, GDP per capita, country’s export share, interest rate spread, regulatory quality, and political stability play an important role.

Over-the-counter market and corporate bond market development

The objective of this paper was to empirically investigate the factors of corporate bond market development for a sample of emerging and developed countries over the period 2008-2017. Here, we used both fixed effect and Prais-Winsten methods to study the determinants of corporate bond market development. We document a negative and significant relationship between primary market issuance and the over-the-counter (OTC) secondary corporate bond market that can be explained by the inefficiency of the OTC corporate bond market and the lack of trade transparency for this trading venue. We suggest that these microstructure elements of the OTC secondary market harm the corporate bond market development and thus discourage corporate bonds issuance. Furthermore, we provide strong evidence of the relationship between economic growth, domestic credits, corruption and the issuance of the domestic corporate bond market.

Analysis of the Legal and Regulatory Situation of Uncovered Corporate Bond Issuance in the Baltic States: is there a Common Framework Possible?

While the development of the Baltic corporate bond market is based on the uncovered bond segment, the elaboration of the legislative base has a devoted emphasis on the covered bonds. The shift from a country-focused to the pan-Baltic-focused capital market has been publicly acknowledged by the governments (Ministry of Finance of the Republic of Latvia, 2018) and is in line with the ongoing Capital Markets Union initiative of the European Commission (The High Level Forum on the Capital Markets, 2020). Moreover, a pan-Baltic covered bond legal and regulatory framework has been initiated (Ministry of Finance of the Republic of Lithuania, 2019). The strong demand for the corporate bond segment in the Baltics (the average number of issues listed in the period 2009-2019 reached 44) where no covered bonds are traded on Nasdaq Baltic (Nasdaq Baltic, 2020) creates the need for a unification of the uncovered corporate bond legislation. The existing academic research is relatively modest on analysing legal frameworks of corporate bond issuance. The studies examine the division between domestic and international (typically Eurobonds) legal issuance frameworks with more focus on the legislative frameworks as related to the terms of issuance. Few articles consider a new supranational bond issuance framework, while the interpretation of the issue is radically diverse. There is no existing academic research on the legal framework of the uncovered corporate bond issuance in the Baltics. The aim of this research is to reveal the feasibility of the development of a pan-Baltic uncovered corporate bond issuance framework by analysing the existing legal and regulatory documentation of the corporate bond issuance in the Baltic states. The research provides a limitation for the corporate bond issuance process legislation in the form of information disclosure requirements and the prospective situation of a default of an issuer. The research presents the primary data analysis of the in-depth interviews with pan-Baltic legal professionals in the corporate bond issuance segment conducted in the period December 2019-March 2020. The research demonstrates that the concern of the information disclosure for the issue of corporate bonds is covered under the new regime of the Prospectus Regulation, where further harmonisation of the smaller scope of issues is needed. The national insolvency laws in the Baltics are yet different and need to be harmonised for the default of the issuer. In the result of the research, the idea of a proposal for a pan-Baltic legal and regulatory framework for uncovered corporate bond issuance is evaluated as feasible action corresponding both to the goals of the Capital Markets Union and a pan-Baltic capital market development. The research methods used in this article are scientific publication analysis, document analysis, and in-depth interviews.

CORPORATE BOND MARKETS IN EASTERN EUROPE: TRENDS AND PROSPECTS

The purpose of the paper is to analyze the process of the corporate bond market formation in Eastern Europe and to determine the prospects for development in Ukraine. Methodology. It is justified that the main variables that affect corporate bond issues are loans granted to financial corporations (excluding banks) and non-financial corporations, share issues and equity. The empirical basis of the study is the reports of the National Securities and Stock Market Commission (on the amount of shares and bonds), the National Bank of Ukraine (on the amount of loans to corporations) and the State Statistics Service of Ukraine (on the amount of corporate equity). The study covers 20 years: from 2000 to 2019. Based on these data, a vector autoregressive model (VAR) was constructed. The forecast error variance decomposition (VDC) technique was used to identify the most influential variables in the corporate bond issuance process. Based on the VAR model, the forecast levels of model variables for 2021–2024 were obtained, which should have been achieved under the condition of planned development of the corporate bond market in Ukraine. It has been suggested that the economic shock of the COVID-19 has led to a decrease in the expected level of variables in 2020. Therefore, seven scenarios for the development of the corporate bond market are considered: A – reduction of equity amount; B – decrease in the amount of shares issued; C – decrease in the amount of loans to corporations; A + B; A + C; B + C; A + B + C. The results of the VDC technique have allowed to establish that the issue of corporate bonds in Ukraine largely depends on the amount of bank loans granted to corporations. Based on the VAR model and scenario forecasting, it was determined that the most favorable for the development of the corporate bond market of Ukraine is the scenario, in which corporations’ equity will be reduced by 10% due to increased uncovered loss but such a reduction will not lead to liquidation, and hence the cessation of circulation of their shares. Practical implications. Forecasting the amount of corporate bonds, shares and loans to corporations based on the proposed model allows companies to develop effective strategic plans, and investors – to decide on the allocation of their own financial resources. Value/originality. The proposed model of corporate bond market development in Ukraine includes internal and external sources of financing of enterprises, and allows to quantify the relationship between financial instruments (corporate bonds, loans and shares).

Does Leverage-Performance Vary with Firm Size? Evidence from India

Purpose: This study evaluates if the relationship between leverage and firm performance is impacted by firm size with a sample of 900 listed non-financial Indian firms over the ten-year period, 2010 to 2019. Approach/Methodology/Design: Threshold panel regression method developed for non-dynamic panels with individual effects is applied. The advantage of this approach is that the number of thresholds and their location is determined endogenously. Findings: The study finds that firm size affects the relationship between leverage and firm performance. A single threshold level of firm size is found to split the sample into two, small firms with total assets of INR 1461.167 million or less and large firms with total assets of over INR 1461.167 million. Leverage is found to diminish firm performance for both small firms and large firms. But the negative impact is less severe on large firms though they employ higher level of leverage and more funds from short-term sources. Practical Implications: The study offers empirical findings to understand the relationship between leverage and firm performance in the context of an emerging market with less developed bond market. Both large and small firms are found to rely heavily on short-term funds. Leverage is found to have a negative association with firm performance for all firm sizes. But small firms that employ less leverage with a lower proportion of funds from short-term sources suffer a higher reduction in performance for leverage increases. The findings of this research call for immediate development of corporate bond market which can be easily accessed by firms of all sizes in order to avert the negative effect of expensive leverage on the growth and performance of these Indian firms. Originality/value: The study is an important contribution to the evolving literature that analyses if leverage-performance varies with firm size applying threshold panel regression method.

DOES LEVERAGE-PERFORMANCE VARY WITH FIRM SIZE? EVIDENCE FROM INDIA

Ponte Academic JournalDec 2020, Volume 76, Issue 12 DOES LEVERAGE-PERFORMANCE VARY WITH FIRM SIZE? EVIDENCE FROM INDIAAuthor(s): Lakshmi KalyanaramanJ. Ponte - Dec 2020 - Volume 76 - Issue 12 doi: 10.21506/j.ponte.2020.12.9 Abstract:This study evaluates whether the relationship between leverage and firm performance is impacted by firm size from a sample of 900 listed non-financial Indian firms over the ten-year period, 2010-2019. The threshold panel regression method developed for non-dynamic panels with individual effects is applied. The advantage of this approach is that the number of thresholds and their locations are endogenously determined. The study finds a non-linear relationship between leverage and firm performance which is contingent on firm size. A single threshold level of firm size is found to split the sample into two groups, small firms with total assets of INR 1461.167 million or less and large firms with total assets exceeding INR 1461.167 million. Leverage is found to diminish firm performance in case of both small and large firms. However, the negative impact is less severe on large firms although they employ a higher level of leverage and rely more on short-term sources. The study offers empirical findings to understand the relationship between leverage and firm performance in the context of an emerging market with less-developed bond market. Both large and small firms are found to rely heavily on short-term funds. Leverage is found to have a negative association with firm performance for all firm sizes. But small firms that employ less leverage with a lower proportion of funds from short-term sources suffer a higher reduction in performance for leverage increases. The findings of this research call for immediate development of corporate bond market which can be easily accessed by firms of all sizes in order to avert the negative effect of expensive leverage on the growth and performance of these Indian firms. Download full text:Check if you have access through your login credentials or your institution Username Password

Corporate Bond Market: International Experience and Russian Practice

The corporate bond market development is integral to increase the resilience of the Russian economy to external shocks and to build a new growth model in terms of sanctions. The purpose of the article is to analyze the current state of the Russian corporate bond market and to develop proposals for accelerating its further development considering the international experience. The proposals are based on a study of the legal base for the functioning of the international bond market, as well as modern technologies and tools that have proven to be effective in practice. As part of a comparative analysis, a hypothetical-deductive research method has been used. The author has proposed: to develop and adopt independent federal law “On Corporate Bonds”; to amend and supplement the Russian legislation on the protection of the rights of investors who purchase corporate bonds; to make trial (debut) issues in the Russian stock market for bonds denominated in foreign currencies (for example, in RMB); to expand the line of bond types, etc. It has been concluded that, despite the unfavorable external and internal conditions, there is a steady increase in the number of issuers and corporate bonds in circulation in Russia. Active bond issue in the Russian financial market in the near future will happen not only in the corporate, but also in the public segment. It will require more active involvement of individuals in purchasing government and corporate bonds as investors. Various types of institutional investors competing with banks will also be attracted. Corporate bond issue can ease the financial burden of banks and companies that have problems with refinancing their external debts. It can also help to solve the problem of financing of the Russian companies that have focused on obtaining various bank loans in order to implement their business plans. This will help to increase the supply of temporarily free monetary resources, to reduce their cost and more efficiently transform savings into investments.

Factors that influence bond markets development in Ghana

The various financial crises all over the globe underscore the need for economies to have vibrant bond markets to augment their financial portfolios. Among other benefits, this will enable them to support rapid and sustained infrastructural development, which in turn will lead to swift economic growth. The small size of the Ghanaian bond market, the accompanying huge infrastructural challenges, the overdependence on external debt and Deposit Money Banks (DMBs), the lopsided empirical evidence, which is concentrated on western and Asian economies coupled with mixed findings in related studies call for the need to examine the factors that promote the country‘s bond market development. This study therefore examines the influence of bond market determinants on the development of the bond market in Ghana. Data was collected from secondary sources covering a period from 1980 to 2015. The Vector Error Correction Model (VECM) is employed as technique of data analysis. The Augmented Dickey-Fuller (ADF) stationarity test, the Johansen Co-integration test and other tests are carried out to ensure the robustness of the results. The findings of the study reveal that bank size, external debt, money supply and size of the economy are significant determinants of corporate bond market development in Ghana. Also, level of economic development, budget deficit and bank size are significant determinants of government bond market size in Ghana. However, bank size, money supply and external debt are seen to be the most important and significant drivers of total bond market size in Ghana

The Limit of Evil: Effects of Inflation and Public Debt on Capital Market Development

It is almost self-evident that capital markets can thrive only in a benign macroeconomic environment. What is often overlooked is that malign macro factors such as inflation and government debt, provided that they are kept under control, can have their bright sides. Previous studies typically presume that the impact of inflation or government debt on capital market development is monotonic, thus precluding the possibility that these factors could be beneficial within a certain limit or threshold. In this study, we take into account this possibility. Our study finds an inverted U-shaped relationship between inflation and the size of the stock market. Hence, inflation within a certain limit may act as a lubricant to the market and help lower the cost of capital in real terms. However, when inflation is too high, long-term investment decisions would be difficult, which is detrimental to stock market growth. An inverted U-shaped relationship is also found between the size of the government bond market and that of the corporate bond market. This suggests that public debt under a certain threshold can benefit corporate bond market development, supporting the notion that the sovereign yield curve plays an important role in pricing private sector debt securities. However, excessive public debt would stifle it.

DETERMINANTS OF THE DEVELOPMENT OF THE CORPORATE BOND MARKET IN LATVIA

The development of the corporate bond market in Latvia while being quick and robust in the period 2012-2017 (the average growth rate 131%, median 44%), has faced major challenges in 2018 (Nasdaq Baltic, 2018). The latter has demonstrated the vulnerability of this alternative to banking financing method in Latvia. In the environment, where the ongoing changes in the banking financing as initiated by the Basel III and Capital Markets Union initiatives, besides to the decision on creation of pan-Baltic capital market with the support of the European Commission and the European Bank for Reconstruction and Development, are bringing more emphasis on the increasing role of the corporate bond market in Latvia; the need to understand its development and factors affecting this development is essential. The goal of this article is to explore the corporate bond market development frameworks as elaborated by the academic research and recognise corporate bond market development determinants, identify the determinants of the corporate bond market in Latvia by running the statistical analysis. Tasks of the research include examining types of corporate bond development frameworks with the focus on revealing the determinants of the corporate bond market development as recognised by the academics, performing the econometric analysis of the determinants selected and building an econometric model of the determinants of the development of the corporate bond market in Latvia as well as drawing corresponding conclusions. In order to accomplish the tasks of the research the following research methods were used: analysis of the previously performed research, analysis of the legislative framework; quantitative research methods: statistical data analysis of macroeconomic data from Bank for International Settlement, The World Bank Database, Bloomberg and Reuters databases; financial market indicator and data analysis from Nasdaq Baltic, Bank for International Settlement, Treasury of the Republic of Latvia, Bloomberg and Reuters databases; correlation analysis, regression analysis. In the result of the analysis, the determinants of the corporate bond market development in Latvia were analysed, where 27 factors as detected by the theoretical analysis to be influencing the corporate bond market development in a country were applied to Latvia. The regression analysis has demonstrated the influence of Gross Domestic Product (GDP) per capita, amount of domestic savings, real GDP growth, amount of government bonds as the share of GDP and regulatory quality on the amount of the corporate bonds outstanding. DOI: http://dx.doi.org/10.5755/j01.eis.0.12.21875

FINANCIAL ENGINEERING AS A TOOL FOR THE DEVELOPMENT OF CORPORATE BOND MARKET IN EASTERN EUROPE ON THE EXAMPLE OF UKRAINE

In the context of the gap between the financial and real sectors of the Ukrainian economy, there is a problem of the absence of financial instruments able to solve the issue of financing the development of the national economic system on a long-term basis. At the current stage of the stock market development, financial engineering has a significant potential for the effective application since it can become an instrument that meets the current needs of the market. The purpose of this article is to study the current dynamics of development and features of the corporate bond market in Ukraine, as well as to develop the parameters of the new profit-bonds with the help of financial engineering, which takes into account investors’ inquiries in the formation of an investment portfolio and supposed to be a profitable form of attracting financial resources for issuers. Methodology. Materials of periodicals, analytical market reviews, resources of the Internet are the informational and methodological basis of the investigation. The research is based on general scientific and special methods, such as: comparison, systematic approach factor analysis, economic and mathematical methods. A comparative analysis of the parameters of financial instruments has been carried out that allowed determining the investors’ inquiries, investment trends and features of the choice of financial instruments by investors and accordingly to offer competitive debt securities according to the parameters of payment, maturity, security, repayment order, issue of currency. The results of the study indicate that there is the necessity of reformation of the stock market in terms of expanding the range of financial instruments based on financial engineering. The introduction of profit-bonds will allow offering participants of the Ukrainian market competitive conditions for the issue of securities, which are based on the modelled parameters of bonds. A schematic algorithm for the implementation of profit bonds is developed; it joins a complex of interrelated stages of implementation, which are sensitive to internal and external factors of influence. Practical implications. Directions for improving financial instruments on the basis of financial engineering can be applied by the participants of the stock market that will increase the general level of economic activity in the national economy and permit to accumulate financial resources on the profitable terms. Value/originality. The article reveals the development of the domestic market for corporate bonds as an important segment of the stock market through the application of financial engineering and the use of new financial products created to address the issue of attracting the necessary financial resources to the real sector. The introduction of financial engineering as a tool for the development of Ukrainian corporate bond market and its schematic algorithm of the implementation will allow an investor to react in time to the market changes. The creation of the State Fund for the Guaranteeing of Income of the Investors Market Act, which is formed at the state level by analogy with the existing Guarantee Fund for Individual Deposits, will allow the fulfilment of the security parameter that will classify profit bonds as long-term debt instruments with a high credit rating.

Determinants of corporate credit spread: evidence from India

Understanding the behavior of corporate credit spread is of paramount importance to understand and manage risk in fixed income securities. This study examines the determinants of corporate credit spread in Indian bond market. By adopting a panel data approach, the study estimates a fixed-effects regression equation to analyze the determinants of corporate credit spread in Indian bond market. The variables used in the study are motivated from structural models and macroeconomic variables and include interest rate variables, stock market variables, inflation and economic growth. The study found that the interest rate variables, stock market variables and inflation are the key variables in explaining the level of corporate credit spread in Indian bond market. The results are robust to the traditional approach of using aggregate yield spread for the whole sample and also when the sample was divided using different industrial classification. Overall, the study highlights the importance of stable interest rate and inflationary environment for the development of Indian corporate bond market.

Кредитный канал монетарной политики в России: микроэкономические оценки для розничного и корпоративного сегмента кредитного рынка

This paper compares the effeciency of the lending channel of monetary policy in the two segments of credit market in Russia, retail and corporative, using monthly data on banks' balance sheets. Our regression analysis shows that REPO weekly rate negatively affects the banks' activities in both segments of credit market; moreover, this effect is two times stronger in the retail segment than in the corporative one. The lending channel is weakened by banks' capital and reserves in central bank (for retail segment only) and is surprisingly amplified by the banks' investments in corporative bonds (for both segments). From the regulator's perspective, our estimates suggest that inducing the development of corporate bond market makes sense for the Bank of Russia because this may increase rather than decrease the efficiency of lending channel. Despite the limited abilities of the Bank of Russia to affect the credit decisions of larger banks, any policy measure that will be accompanied with an easing of capital requirements will be compensated by increased efficiency of the lending channel in the corporate segment of credit market. From the standpoint of countercyclical capital buffers this automatically implies that the efficiency of lending channel is tending to increase during the periods of macroeconomic recessions and, vice versa, to decrease when the economy enjoys growth.

KUALITAS PASAR OBLIGASI KORPORASI INDONESIA

lndonesia corporate bond market development can he done from various aspects, among others, through the stability and improvement of macroeconomic indicators, improving the quality of financial infrastructure, and improving the quality of the corporate bond market.
 This study aimed to describe the quality Indonesian corporate bond market based transaction costs approach. Therefore, the quality of the corporate bond market in this study manifested by transaction costs and decomposition of transaction costs (information friction and real friction). Based on the estimation of transaction costs and decomposition of transaction costs, regulators and market managers can create a variety of policies to improve the quality of the corporate bond market.
 To achieve these goals, the data used were corporate bond registered and transacted in the bond market and the sources of data from Securities Division reported OTC-FIS (Over the counter – Fixed Income Service). The research samples were 2336 observations using the purposive sampling technique to gather samples. The data were analyzed using the multiple regression equation.
 The research indicates that: First, transaction costs ty’ corporate bond is 0-798 with t-statistic is 31.964. Second, the contribution of information friction againts transaction cost is 45.1 percent with t-statistic is 18.20. "third, the contriliution real friction againts transaction cost is 14.2 percent with t-statistic is 5.71. Fourth, the information friction have the greater contribution to transaction cost with or without the classification of sample. Fifth, in the change of bond price segmentation, the contribution of information friction increases with the increase of the change of bond price.
 With reference to the research results, the quality of the corporate bond market can he improved by lowering the transaction costs in trade mechanism. Transaction costs can be reduced through increased transparency and improved the trading niechanisni of corporate bond market. Furthermore, the result if this research can be used by investors in creating portfolios and holding periods and for bond emitters in issuing bonds.

WAITING FOR THE CAPITAL MARKET UNION: THE POSITION OF LATVIAN CORPORATE BOND MARKET

Baltic region is traditionally treated as similar and comparable when analysed on the macroeconomic level. The major difference is faced when the analysis is performed for the corporate bond market – the weight of Latvian publically traded corporate bonds among the three countries- Latvia, Lithuania and Estonia- reached 94% by the number of issues quoted. With 47 corporate bonds listed in Nasdaq Riga, Latvian corporate bond market demonstrated the rapid growth and recognition of corporate bonds as the source of alternative to bank lending financing method (Nasdaq Baltic, 2017). There are no obvious macro or microeconomic evidence for Latvia meeting more favourable conditions for corporate bond market development than Lithuania and Estonia The increasing role of the capital market as the alternative to the traditional to Europe banking sector is strongly supported by the European Commission (EC). In 2015 the EC announced the Capital Market Union (CMU) initiative and respective action plan as the reaction to the challenges faced by both banking sector and small and medium enterprise (SME) segment in Europe. As integrated and more diverse capital markets will decrease the cost of funding for companies, the objective of the CMU is to make the financial system more resilient in all 28 Member States including Latvia, Lithuania and Estonia (European Commission, 2017). While several steps like proposal to modernise the Prospectus Directive have been made, further actions based on the review of regulatory barriers to SME admission on public markets and SME growth markets and review of European Union corporate bond markets, focusing on how market liquidity can be improved made in 2017 will follow (European Commission, 2015). The aim of this article is to analyse the level of development of the biggest Baltic corporate bond market- Latvian corporate bond segment and to reveal the potential CMU introduction effect. The paper applies Financial Sector Development Indicators (FSDI) framework developed by The World Bank (World Bank, 2004) to the country cluster as defined by Bending et al (2014). The paper relates the results to CMU action plan developed by the European Commission. The article estimates that Latvian corporate bond market is highly developed compared to the peers selected where the only lagging area is size. The article concludes that reviving securitisation, participation in European Long Term Investment Funds and developing European private placement market should be prioritised for Latvia within CMU framework.DOI: http://dx.doi.org/10.5755/j01.eis.0.11.18147

Corporate Bond Market Development in Nigeria : Does Macroeconomic Factors Matter ?

Corporate Bond Market Development in Nigeria : Does Macroeconomic Factors Matter ?