Determinants of corporate bond market size: Evidence from asian countries and implications for Vietnam

 Dr. Nguyen Thi Ha Thanh, Le Thi Ngoc Mai – Foreign Trade University

Abstract:

After the Asian crisis of 1997, developing countries started paying more attention to the role of corporate bond markets in the economy. Having a strong local currency corporate bond market is expected to help Asian economies like Vietnam better allocate funds into profitable investments and increase resilience of the domestic financial sector to external shocks. The study attempts to explore economic, financial, and institutional developmental factors that contribute to the growth of the size of corporate bond markets by using the data set from ten Asian economies (China; Hong Kong, Indonesia; Japan; Korea; Malaysia; the Philippines; Singapore; Thailand; and Vietnam). The empirical findings by generalized least squares model show that the level of economic development as shown by GDP per capita is one of the most important factors in the development of corporate bond markets. Other significant factors are the availability of domestic bank credit and a thriving market for government bonds. Better creditor rights protection also contributes to the growth of corporate bond markets. Furthermore, the study also intends to provide recommendations to further develop the Vietnamese corporate bond market.

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Keywords: Asian countries, corporate bond market size, determinants, Vietnam.