| The corporate bond market plays an important role in the securities market in China. It, however, lags far behind the development of the treasury bond market and stock market and has become the "short-board" in the financial market. For many years, corporate bond systems have not effectively been carried out, and as a result, have failed to push the development of the corporate bond market. A study on the function of the corporate bond and the development of the corporate bond market in developed countries provides an analysis of the risks in the corporate bond market in China and the causes for those risks from the perspectives of economics, management, and law. The study points out that only when the interests of investors are well-protected can the coporate bond market develop.The study analyzes the financing, investment, and macro-function of corporate bond markets. It demonstrates the appropriate usage of corporate bond to yield maximum investment potential and illustrates the necessity of marketization, legalization, and standardization of the corporate bond market. Improper government regulation is believed to be the primary cause of the underdevelopment of the corporate bond market in China. The study later discusses government regulation and analyzes "methods for issuing corporate bonds in the experimental units". The study concludes that these "methods" are unable to solve the basic problems in the development of corporate bonds in China. Based on an analysis of the various risks in the corporate bond market and the causes for those risks, the study concludes that the investor risks that affect corporate bond markets are more likely to be the key investor, financing, and agency risks.To support this conclusion, the study provides a theoretical model for the protection of investors in the corporate bond market. The study also discusses the three kinds of risks investors are facing and gives recommendations to better develop the corporate bond market in China. |
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