Bond Market Development Research Articles

Drivers of Portfolio Flows into Chinese Debt Securities Amidst China’s Bond Market Development

Abstract The paper focuses on China’s onshore bond market and the drivers of non-resident net portfolio flows into Chinese debt securities. Following a review of China’s bond market, a simple theoretical model of push and pull factors driving bond flows is built. It represents a foundation for the empirical analysis on drivers of bond flows into China. Static and time-varying models are estimated to explain the importance of push and pull factors in China’s bond market. While China-specific pull factors, such as domestic economic growth and asset returns, are important drivers of flows, the results reveal that global push factors, such as US interest rates and risk aversion, have recently gained significance as drivers of flows into China. The results confirm China’s continued bond market deepening and integration with the rest of the world, which may have financial stability implications. Therefore, increased awareness regarding bond market developments in China is warranted.

The Impact of Monetary Policy on the Liquidity of Bond Market——Based on Chinese Local Government Bond Market

The bond market serves dual roles in fiscal and financial spheres, playing a crucial role in coordinating monetary policy. This paper investigates the impact of quantitative and price-based monetary policies on the liquidity level of China’s bond market. A comprehensive index measuring the liquidity of the local bond market is constructed using a combination weighting method that integrates the entropy method and the coefficient of variation. Employing the time-varying stochastic volatility structure vector autoregression (TVP-SV-SVAR) model on data spanning from 2013 to 2021, the study empirically compares the impulse response of local bond market liquidity to monetary policy shocks. Findings reveal that both types of monetary policy operations exhibit asymmetric, nonlinear, and time-varying impacts on bond market liquidity. Quantitative monetary instruments induce deeper impulse responses, with longer-lasting effects. These conclusions offer insights for monetary policy reforms and bond market development in China.

Study on the Tort of Misrepresentation in the Inter-bank Bond Market--Taking Case No. 1 of the Beijing Financial Court as an Example

Chinese interbank bond market dates back to June 1997, when the People's Bank of China decided to open an interbank bond trading business at the National Interbank Lending Center, which was formally established. In the following years, this market developed relatively fast, and in June 2002, the bond counter market of commercial banks began to operate, which to a certain extent made the interbank bond market, which institutional investors dominate, expand through the counter trading for all kinds of investors in the whole society.In recent years, applying direct financing tools such as corporate bond issuance has become increasingly widespread. This paper takes Beijing Financial Court Case No. 1 as an example to study in detail the important reasons for the emergence of this type of infringement, focusing on the obligations and responsibilities of each participant, including the issuer Dalian Machine Tool Group, the intermediary bank Industrial Bank, and the investor Bluestone Capital Management. This paper aims to sort out the obligations and responsibilities of each participant in the inter-bank bond market to find out the reasons for the emergence of the phenomenon of misrepresentation and to explore the issues that appear to be suitable for this paper to find out the causes of misrepresentation, explore the operation rules and risk prevention measures of the interbank bond market that are suitable for China's national conditions, to solve the problems of misrepresentation, standardize the obligations and responsibilities of all parties, and promote the development of China's interbank bond market.

ANALYZING THE DETERMINANTS OF BOND MARKET DEVELOPMENT IN NIGERIA

<span>This study examines the key factors influencing the development of Nigeria’s bond market using time series data from 1981 to 2022. While employing quantitative methods, the study identifies a strong long-term relationship between key economic variables and bond market development. Major findings highlight the critical roles of inflation, fiscal deficit, foreign direct investment, and per capita income in shaping market growth. The study provides practical policy recommendations, including measures to boost market liquidity, improve transparency, and promote public-private partnerships for sustainable bond market development. These findings contribute significantly to understanding the dynamics of emerging bond markets and their potential for economic development in Nigeria.</span>

Analyzing the factors influencing the green bond market's development

Analyzing the factors influencing the green bond market's development

Vai trò của Fintech đối với thúc đẩy thị trường trái phiếu xanh hướng tới phát triển bền vững

Developing the green bond market is one of the goals of most countries aiming to achieve sustainable development. The increasingly strong development of financial technology is suggested to have an impact on the green bond market. The article focuses on clarifying the impact of financial technology on the green bond market using qualitative and quantitative research methods. Data collected from ASEAN+3 countries, including Vietnam, from 2011 to 2021 are used for the fixed effects regression method, the random effects regression method, and GLS regression models. The regression results demonstrate that financial technology positively impacts the development of the green bond market. This is the basis for proposing several recommendations for developing financial technology and infrastructure to promote the development of the green bond market in Vietnam.

Market volatilities vs oil shocks: Which dominate the relative performance of green bonds?

The market performance of green bonds determines whether they will make a significant contribution to future financial markets and sustainable investment. It is therefore important to conduct a thorough study of the dominant factors affecting the market performance of green bonds, particularly their performance relative to conventional bonds. Thus, the main objective of this paper is to investigate and compare the impact of market volatilities (mainly VIX, OVX, and MOVE) and oil shocks (including supply shock, demand shock, and speculative demand shock) on the relative performance of green bonds. The main findings indicate that when volatilities coincide with oil shocks, the former consistently exert a more pronounced influence on the relative performance of green bonds. This phenomenon is particularly evident in the post-COVID-19 period. Concerning crude oil shocks, oil supply and demand shocks have opposite effects on the relative performance of green bonds, with the supply shock having a negative impact and the demand shock having a positive impact. Furthermore, our analysis shows that volatilities and oil shocks tend to have significant effects on the relative performance of green bonds during periods of heightened market risk aversion, while their impact remains negligible in a stable market environment. The empirical results may provide novel insights and significant implications for the further development of the green bond market.

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.

Green Bond Issuance and Corporate Investment and Financing Level: Evidence from Chinese Listed Companies

After the formation of the Chinese green bond market in 2016, it rapidly developed. However, there have been relatively few studies in academia on the financial performance of enterprises after issuing green bonds. In order to promote the development of the green bond market and guide enterprises to improve their investment and financing decisions, this paper uses panel data of A-share listed companies and green bond issuing companies from 2012 to 2022 as samples to study the impact and mechanism of green bond issuance on the investment and financing behavior and maturity mismatch of enterprises. The conclusion drawn is that green bond issuance significantly promotes the improvement of enterprises' investment and financing capabilities, and it also reduces the degree of maturity mismatch for enterprises. This conclusion passes the parallel trends test and remains robust after controlling for the effects of corporate financial asset allocation, industry time trends, and excluding competitive hypotheses. Through mechanism research, it is found that green bonds can improve the level of enterprise investment and financing and the degree of maturity mismatch by reducing the degree of financing constraints on enterprises. They can also enhance enterprise investment and financing capabilities by changing market sentiment and alleviate the maturity mismatch of investment and financing.

Analysis and Governance of "Greenwashing" Behavior in China's Green Bond Market

With the Chinese government and leaders attaching great importance to the construction of ecological civilization and the green financial market, green bonds have become an important tool to promote green development. However, the problem of "green washing" in the market not only erodes investors' trust in the market, but also damages the credibility and actual effectiveness of green finance, posing a potential threat to the continuous promotion of ecological civilization construction. This article analyzes two typical behaviors of "greenwashing" in the Chinese green bond market: false labeling of green projects and opaque use of funds, and explores their causes, involving problems such as incomplete green bond standard formulation and certification system, weak regulatory crackdown, short-term interest driven corporate behavior, insufficient public green awareness and supervision. Targeted response strategies have been proposed: firstly, to improve the green bond standard formulation and certification system, ensuring the authenticity of green projects; Secondly, enhance regulatory efforts and punishment measures, and build a rigorous legal environment; The third is to improve the transparency of information disclosure, requiring enterprises to regularly disclose the progress of projects and the use of funds; The fourth is to establish a sound investor protection mechanism and safeguard the legitimate rights and interests of investors. Through these measures, it is possible to effectively regulate and curb "green washing" behavior, and promote the sustainable development of the green bond market.

Determinants of Bond Market Development in Nigeria

Capital market is of paramount importance in financing the activities of public and private sectors in both developed and developing economies. Consequently, this research analyzed the long run equilibrium relationships between bond market development (BMD) and a set of fiscal, macroeconomic and financial variables in Nigeria using Granger causality test and Johansen cointegration model. The findings reveal the importance of macroeconomic and financial variables in facilitating the development of Nigeria’s bond market. The study recommended that policy makers should ensure macroeconomic stability and financial soundness in order to develop bond market in the country.

Bond Market Development and Infrastructure Investment Gap: Lessons for the African Continent

This paper, seeks to draw lessons for the African continent based on the experiences of three pioneer countries in bonds issuance for infrastructure financing. Theoretical foundation: The preferred habitat theory served as the study's lenses.it focuses on the bond market participants' choices for bonds as a financing option. Methodology: The authors conducted a systematic review of the literature using the SALSA framework, which is a search, appraisal, synthesis, and analysis framework. Findings; There is a pressing demand for bond market development in Africa. Developed and developing economies widely utilize bonds to bridge worldwide infrastructure investment gaps. Whereas some African nations have embraced them, there is still a lot to be done. Amongst others, is the need to familiarize with the various bonds available as a financing tool for infrastructure, the contribution of bond markets globally, the motivation for various bond market participants not disregarding the bond market processes and enablers. Practicability: This study solely employed a secondary literature analysis; other researchers can do the same investigation using different methods like the qualitative techniques that entail interviews or quantitative approaches. It also highlighted the bond processes and enablers based on the experiences of three countries that pioneered bond issuance. Further research can look at more or different countries for drawing lessons. Originality; This is the first article to present an overview of bonds, bond market participants, processes and enablers. As well as, the first paper to draw lessons for African countries based on the first-time experiences of Senegal, South Africa and United states of America.

Bond Market Development and Infrastructure Development Index; an Analysis of African Countries with the Portfolio Investment Bonds

This paper analyses the empirical relationship between portfolio investment bonds and Infrastructure development index in Africa. The study seeks to establish if there is a statistically significant relationship between the portfolio investment bonds and infrastructure development index in Africa. Panel data of 13 countries for the period of 9 years from 2013 to 2022 was adopted. The study is supported by positivism philosophical underpinnings, a quantitative approach, multiple case design. It is a triangulation of correlation, regression, and hypothesis -testing through the linear dynamic panel data Generalized method of Momentum (GMM) model. This model estimates the empirical relationship between the key variables under study. The results from the study indicate a significant positive relationship between the portfolio dollar amount logged twice from the world bank data indicators and the infrastructure index from the Africa Infrastructure development Indicator (AIDI) also logged twice based on the model requirements. Therefore, countries that receive higher portfolio dollar amounts realize more infrastructure development. It is therefore recommended for African countries to create a Political, Economic and Regulatory supportive policies for bond market development especially the portfolio investment bonds. This paper ascertains a relationship between bond market development and Africa infrastructure development index. And develops policy discussions regarding infrastructure financing though a well-developed bond market with a variety of bond types

A Microstructure Study of Indian Corporate Bond Market: A Review

This Review study explores various dimensions of the Indian capital market, encompassing both equity and bond markets. It delves into the influence of equity market factors, macroeconomic variables, and corporate bond market growth on the overall financial landscape. The relationship between equity market returns, equity market volatility (VIX), and the rupee-dollar exchange rate on bond yields. They highlight that increasing volatility in the equity market leads to a higher demand for fixed income securities, subsequently reducing bond returns. The underscores the significance of a robust corporate bond market for financial system stability, credit availability, and mitigating corporate sector crises. It reviews the growth of the Indian corporate bond market and its implications for monetary, fiscal, and economic variables. The results indicate that a comprehensive corporate bond market does not exhibit a significant positive or negative association with these variables. However, GDP emerges as a crucial factor for India's bond market development, particularly in terms of foreign participants. Lastly, the influence of macroeconomic variables on the Indian corporate bond market over a 23-year period. They reveal a significant correlation between corporate bond market issuance and foreign exchange reserves. Through multiple regression analysis, they found that all selected variables, except GDP and trade openness, significantly explain the volumes of corporate bonds. Collectively, their findings contribute to a comprehensive understanding of the interplay between equity market dynamics, corporate bond market growth, and macroeconomic factors in the Indian capital market. The study provides valuable insights for policymakers and investors, aiding in informed decision-making regarding investment strategies, market stability, and economic growth.

Understanding the determinants of the development of the green bond market in South Africa

Understanding the determinants of the development of the green bond market in South Africa

Exploring the determinants of green bond market development in Bangladesh

Exploring the determinants of green bond market development in Bangladesh

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.

Prospects for the Development of Bond Circulation in the Capital Market

This article explores the prospects for enhancing bond market development in developing economies. It delvesinto the significance of bond markets, examines global experiences, and provides tailored recommendations to addresschallenges and leverage opportunities. By focusing on regulatory frameworks, market infrastructure, investor education,and government leadership, this article aims to guide developing countries in nurturing vibrant bond markets. Thesemarkets hold the potential to mobilize capital, promote economic diversification, ensure financial stability, and facilitatecritical infrastructure financing.

Bond Market Development in East Asia: Issues and Challenges

Bond Market Development in East Asia: Issues and Challenges

Senior Non-preferred Bonds as an Instrument to Meet the MREL Requirement

The purpose of the article is to present the results of the first assessment of the senior non-preferred (SNP) bond market’s development in Poland. SNP bonds were introduced to facilitate meeting the banks’ MREL, which aims to build banks’ loss absorption and recapitalization capacity. At the same time, they are the next source of bank funding. The development of the SNP bond market has been initiated relatively recently with the full establishment of resolution systems and the introduction of the MREL requirement for banks. Although the first non-binding decisions to impose the MREL requirement were issued in 2016, the concept of SNP was formally introduced in 2017. In 2019, an amendment to the rules for determining the MREL requirement was adopted, which was implemented into the Polish legal framework in 2021, and in 2022, an amendment to the regulations on bonds was introduced, enabling the issuance of SNP bonds counted to MREL. Since then (2022), there has been a full legal framework for setting and maintaining the MREL requirement, and therefore full conditions for the development of this market in Poland. Therefore, it is justified to say that this market is relatively young. Moreover, it is under-investigated by scientists. This justifies the assessment of the potential scale of this market, its ability to achieve the goal for which it was created, as well as the premises and barriers to its development.
 Methodology. The research methods were quantitative analysis (calculation of the potential shortage of the MREL requirement and needs in the field of securities issuance based on reporting data) and qualitative analysis (in terms of assessing the challenges).
 Results of the research. The main determinant of its potential is the amount of MREL shortfall, which depends on the financial situation of banks and partly on the strategy of resolution authorities (responsible for setting the level of this requirement). The main challenges for the Polish SNP bond market are related to the prospects for further development of the banking sector and its environment (business and strategic). Nevertheless, it seems that the potential of the SNP bond market in Poland is underrated. The article contributes to general knowledge about bank funding sources.