Comparative Study On China's Inter-bank Bond Market And Stock Exchange Bond Market

Ever since its establishment of more than 20 years ago, China's bond market has been experiencing fast growth. However, there still exists problems, which hinder its further development. One of the main problems is the segment of two different bond markets. The two bond markets, one is inter-bank and the other is the stock exchange bond market, each of which has its own product types, transaction principals, transaction mechanisms and market regulator. The foresaid four issues create the segment of the two markets. The two markets can't have coordinated development, and sometimes even develop in the opposite direction, which seriously hamper the growth of a healthy national bond market.Though the issuance of some cross-market products improves the situation, the author think that problems of the segment of markets will only be solved by in-depth study on those factors that affect the market segment. This dissertation tries to provide the methodology which help establish a unified and efficient bond market in China through the comparison study of the two markets on their relationships, reasons of the segment and the negative impact of the segment.This disseration includes six chapters. The first chapter briefly describes the development and the current circumstances of China's bond market. The second chapter elaborates that the current transitional principal is imperfect and unreasonable by comparing the overall inter-bank market and stock exchange bond market in terms of their transaction principals, bond types, bong custodian and market regulator. The third chapter is the liquidity analysis of the bond market. Through the comparison of the two markets'exchange rates and various factors that affect the liquidity,the author proves that the lack of diversified transaction ways, the vulnerability of the market equilibrium mechanisms and the market segment will have nagative impact on the improvement of the market liquidity. The fourth chapter deals with the bond market volatility analysis. The author calculates the volatility of the two market bond prices,analyzes the different factors that influence these prices and then reachs the conclusion that due to the lack of the market equilibrium mechanisms, the market volatility is very big and speculative activities prevail. The fifth chapter gives in-depth analysis on yield curves. The author respectively measures the yield curves on the two markets, analyzes the factors that have impact on yields and because of the difference between the two markets, the market segment is obvious. Based on the previous analysis, the last chapter puts forward the methodology on how to establish a unified and efficient bond market.