Importance of Bond Markets

The 1997 financial crisis in Asia would not have occurred if functioning capital market would have existed .An active local Corporate bond market – bond market would have allowed firms to issue debt securities that would have been a better match for the timing and currency of their cash flows .This has change in the past few years and the expansion of the corporate –bond market in emerging econimes has been encouraging .Emerging Asia’s corporate-bond market were worth 7.1%of GDP Last year , up frim 4.3%in 1997.The biggest success can been seen in Malaysia and south Korea, where the value of out standing corporate-bond is bigger ,relative to GDP, than in America. Thailand success is also remarkable and not much below Japan’s relative to GDP size. Astonishingly China and India are far far behind . In China the reasons are a very complicated approval process and high costs of issuing .The same is valid for India. Developing corporate-bond market is important for financial stability both as a buffer when other funding sources run dry and to reduce mismatches in a firm’s balance sheet. And the overall economy prospers too, as saving can find their way towards more productive investments