What Effect has Bond Market Development in Asia had on the Issue of Corporate Bonds

Abstract

This paper investigates the determinants of the firm's decision to issue corporate bonds in emerging Asian economies, using a novel database covering the period 1995 to 2004. We use comparable micro level panel data for 4 countries - Indonesia, Korea, Malaysia and Thailand - to explore the influence of firms' size and growth prospects, financial health and indicators of bond market development on the decision to issue corporate bonds. Our results show that the likelihood of bond issuance increases with size and growth prospects and with creditworthiness in all countries; there is evidence of firm level heterogeneity across firm size classes. Importantly, there is no effect from bond market development on the likelihood of bond issuance. We conclude that the benefits of bond market development are yet to spillover to corporate bond markets.Bond financing, financial variables, development, emerging Asian markets.