Study On Emerging Corporate Bond Markets Of East Asia

Imbalance development of capital markets has become a serious question in China, and actively developing China's corporate bond market is an inevitable trend, therefore, research on corporate bond market has important theoretic and practical value. The researchers have paid more attention to mature corporate bond markets and little attention is given to emerging corporate bond markets. The experience of mature corporate bond markets should be used for reference undoubtedly, but the experience and lessons of emerging corporate bond markets shouldn't be neglected. Emerging corporate bond markets of East Asia have gained great development after the Asian Financial Crisis. As China's corporate bond market is an emerging market too, it has particular conditions and some common points with other East Asia corporate bond markets. Therefore, the experience and lessons of these comparatively developed corporate bond markets undoubtedly have more important directional value. From this point of view, emerging corporate bond markets of East Asia deserve to be studied.Under the guidance of Institutions and Institutional Evolution, Capital Market Efficiency Theory, Financial Market Micro-structure Theory and Capital Structure Theory, this dissertation studies East Asia emerging corporate bond markets from institutional macro environment, market micro structure and firm-level perspective respectively. The author tries to find some useful experience and lessons for reference of China's corporate bond market construction, and on the basis of previous researches, provides some suggestions on how to improve China' s corporate bond market from institution construction, market microstructure and firm-level perspective respectively. This dissertation consists of six chapters as follows:Chapter 1 is the introduction, this chapter is the brief explanation of the whole dissertation, mainly summarizes the background and significance of the research, defines main conceptions, hackles and appraises the related papers and present research situation at home and abroad, sets forth the angle, thread, structure and approaches of the study, and lastly sums up the main innovative points of the thesis and further research directions.Chapter 2 is the theoretical fundaments of the full dissertation. After hackling Institutions and Institutional Evolution , Capital Market Efficiency Theory, Financial Market Micro-structure Theory and Capital Structure Theory, this chapter sets up a new institution economics theoretical analyzing framework of East Asia emerging corporate bond markets according to the new institution economics theories and the practice of corporate bond markets.In chapter 3, the author applies Institutions and Institutional Evolution theories to study institution environment of East Asia corporate bond markets. After analyzing the related formal institutions such as financial and legal institutions and informal institutions such as Confucian Culture and propensity to save, which affect the development of East Asia corporate bond markets more or less, this chapter finally studies the performance of institution transplant in East Asia corporate bond markets. This chapter draws the conclusion as follows: 1.Perfect and reasonable formal institutions are important precondition of healthy development of corporate bond markets. Deficient supply of formal institutions such as financial and legal institutions has confined the development of corporate bond markets to some extent. Although some measures have been taken to promote the development of East Asia emerging corporate bond markets, because of path dependence of institutions, the great improvement of institution environment of East Asia emerging corporate bond markets will get a long way to go. 2. Although informal institutions don't play a decisive role in development of East Asia emerging corporate bond markets, it can't be denied that informal institutions such as Confucian Culture, value concept and propensity to save affect social economy, behavior of firms and individuals more or less, and then affect development of corporate bond markets. 3. Some emerging corporate bond markets in East Asia have achieved some performance in institution transplant from mature corporate bond markets, but because of reasons such as incomplete institution transplant and executive system, maladjustment of transplant institutions with informal institutions, the performance of some transplant institutions in East Asia emerging corporate bond markets is not as well as in mature markets.In chapter 4, the author applies Capital Market Efficiency Theory and Financial Market Micro-structure Theory to study the micro structure of East Asia emerging corporate bond markets under the framework of efficiency. This chapter focuses on analyzing micro structure efficiency of East Asia emerging corporate bond markets from several aspects such as corporate bond variety structure, market subject structure and market organization structure. In recent years, East Asia emerging corporate bond markets have gained great progress in both market scale and structures, and they are playing more and more important role in improving capital allocation and investing and financing system of their home countries. However, the East Asia emerging corporate bond markets are not mature yet, which with simplex bond variety, poor market infrastructure, incompatible market subject structure and organization structure, immature pricing and trading system. Compared with mature corporate bond markets, structure efficiency of the East Asia emerging corporate bond markets is much lower, which affects operational efficiency and allocative efficiency to a large extend, and it also affects the function of East Asia emerging corporate bond markets.In chapter 5, the author applies Capital Structure Theory to study the correlation between firms and their financing behavior with East Asia emerging corporate bond markets. This chapter firstly analyzes the correlation between firms' financing structure and corporate bond markets, then focuses on how the family-dominated corporate governance model in East Asia affects the development of corporate bond markets. The author draws two conclusions from this chapter: First, there is close relationship between financing structure of firms and corporate bond markets, which mainly embodies in the initial state of corporate bond markets providing the basis for firms to choose financing patterns, and on the other hand, firms' attitude to bond financing will affect the further development of corporate bond markets. Before the Asian Financial Crisis, corporate bond markets in this region are underdeveloped, and are still immature at present, this situation confines corporate bond financing to some extent, while the firms' indifference to bond financing in turn aggravates the shrink of corporate bond markets. Second, from micro view, slow development of East Asia emerging corporate bond markets for a long time is related to the family-dominated corporate governance in this region, which embodies in the following two aspects: 1. To hold control rights, family enterprises exclude equity financing, which narrows financing channels, and the size is limited, therefore, it is hard to form a great deal of creditworthy and large asset size issuing subject foundation. 2. In East Asia, shareholdings of many enterprises are highly centralized in founding families. As large-sized enterprises rely heavily on bank loan financing, while medium and small-size enterprises do not have the capacity to issue bonds, therefore, supply of corporate bonds is limited, which confines development of the markets on the side of supply. In a word, the family-dominated corporate governance model in East Asia affects financing patterns of enterprises and the development of corporate bond markets.Chapter 6 is the standing point and terminal aim of this dissertation. Based on the experience and lessons of East Asia emerging corporate bond markets, the author provides some countermeasures and suggestions on how to improve China's corporate bond market from three levels: optimizing institution environment, improving market micro structure and shaping good corporate bond issuers.The innovative points of the thesis include the following items.First, As East Asia emerging corporate bond market is an intermediate development phase of corporate bond markets which evolve from the immature to the mature, conducting systematic and specific research on them is itself a methodological innovation.Second, the thesis sets up a new institution economics theoretical analyzing framework of East Asia emerging corporate bond markets according to Institutions and Institutional Evolution, Capital Market Efficiency Theory, Financial Market Micro-structure Theory and Capital Structure Theory.Third, this thesis goes deep into East Asia emerging corporate bond markets following a new thread which is from institution of macro-angle to market micro structure and then to firm subjects of micro-angle.Fourth, this thesis is the first to study the influence of informal institutions such as Confucian Culture and propensity to save on the development of East Asia emerging corporate bond markets. The author deems that although informal institutions don't play a decisive role in development of East Asia emerging corporate bond markets, it can't be denied that informal institutions such as Confucian Culture, value concept and propensity to save affect social economy, behavior of firms and individuals more or less, and then affect development of corporate bond markets.Fifth, the author conducts exploratory research on institution transplant of East Asia emerging corporate bond markets. The author maintains that, some emerging corporate bond markets in East Asia have achieved some performance in institution transplant from mature corporate bond markets, but because of reasons such as incomplete institution transplant and executive system, maladjustment of transplant institutions with informal institutions, the performance of some transplant institutions in East Asia emerging corporate bond markets is not as well as in mature markets.Sixth, based on panel data and cross-sectional data, the author applies cross-sectional regression and pooled OLS to empirically examine macro and micro determinants of listed companies in China, Singapore, Thailand and Malaysia. The empirical evidence indicates debt maturity structure is strongly related not only to firm-specific factors but also country-specific factors. In a word, debt maturity structure is a comprehensive financial decision under the common effects of firm-specific and country-specific factors. As bond financing is a component of corporate debt financing, factors that affecting corporate debt maturity structure are also factors that affecting corporate bond maturity structure to a large extent.Problems left to further study are: 1. Globalization of capital market is the objective requirement and natural trend of development of world economy, and opening domestic bond markets to foreign issuers and investors is the necessary choice of the emerging markets melting into financial globalization and integration. Therefore, studying East Asia emerging corporate bond markets from an open angle will be one of the further research directions. 2. Quantitative study on factors that affect development of East Asia emerging corporate bond markets and corporate bonds pricing should be strengthened by further mathematical models and data collection.