South Asian Bond Markets pdf

South Asian Bond Markets Developing Long-Term Finance for Growth Kiatchai Sophastienphong Yibin Mu Carlotta Saporito 45497 Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure Authorized South Asian Bond Markets [...]... domestic debt securities markets varies widely India’s is the most developed Its experience, along with those of East Asian economies, suggests that much potential remains for developing South Asian bond markets and expanding their contribution to growth and development Greater regional integration of South Asian bond markets could add to the benefits The Importance of Bond Markets Bond markets gained prominence... Integrating bond markets can provide investors with a broader range of investment instruments and firms with a broader investor base It can also enhance market liquidity, increase competition among markets and intermediaries, lower transaction costs, and strengthen incentives for innovation xxi xxii South Asian Bond Markets How Do South Asian Bond Markets Compare? The development of domestic debt securities markets. .. undermines market efficiency Of course, bond markets have limited liquidity even in the most advanced economies 4 South Asian Bond Markets Even so, bond markets in East Asia are on average much less liquid than those of advanced economies And not surprisingly, liquidity is even lower in the region’s corporate bond markets One vehicle for deepening and diversifying bond markets, in the eyes of many policy... well-functioning domestic bond markets can help countries generate the long-term financing needed for sustainable economic growth In South Asian bond markets still fall short of their potential—in most countries, far short India has the region’s most developed market Its experience, along with those of East Asian economies, suggests that much potential remains for developing South Asian bond markets and expanding... percent of South Asian financial assets The banking sector follows with 35 percent, and the bond market with 20 percent South Asian financial markets amounted to about $2 trillion in 2006, about 14 percent of the size of East Asia’s India accounted for 89 percent of the total But while India dominates all three markets in South Asia, it is Sri Lanka that has the region’s largest outstanding bond market... with the size of the region’s economies and with markets in East Asia Even in India the market is still small relative to GDP, suggesting that long-term debt financing remains at an early stage in the region Equity markets and banks still dominate South Asian financial systems Measures are needed to enhance both the depth and the breadth of South Asian bond markets, to bring them into line with those in... substantially among the five South Asian countries studied India’s is the most advanced, and Nepal’s the least But even in India the market is still small relative to GDP, suggesting that long-term debt financing remains at an early stage in the region Most South Asian bond markets remain negligible in size compared both with the size of the economy and with markets in East Asia Equity markets and banks still... making; because bond markets are sensitive and quick to react to macroeconomic policies and conditions, they send signals allowing early policy adjustments Domestic bond markets benefit participants at all levels of the economy Governments, as bond issuers, have both fiscal and monetary reasons for encouraging the growth of well-functioning domestic bond markets On the fiscal side, such markets enable... securitizing them and passing them on to investors through the bond markets And foreign investors will participate more actively in local currency bond markets as these markets become larger, more liquid, and more transparent Regional Overview xxiii But realizing the full potential of the region’s bond markets, and ensuring sound, well-functioning markets, will require putting into place essential elements—or... and Bonds, Sri Lanka, 2001–October 2007 172 Foreword There has been much interest in South Asia in developing domestic debt securities markets In recent years countries in the region have sought to develop both government and corporate bond markets However, these remain at an early stage of development relative to both the domestic banking sectors and to bond markets . AuthorizedPublic Disclosure AuthorizedPublic Disclosure Authorized South Asian Bond Markets