China's Corporate Bond Market Study

The development of the securities markets is very important to construct our socialism market economy. But the structure of our securities markets is lopsided. Especially the development of the enterprise bond market had lagged. It restrains the farther development of the securities markets and results in the limitation of enterprise financing. What is wrong with the bond market? there are two primary kinds of viewpoint:1, the government restraints;2, the imperfect of the market self. Both of them don't fully explain the causes. I wish to explain deeply in the paper.Firstly, concerning the lopsided securities markets, narrate the background and motivation of writing. Then using enterprise debt financing theory, the paper shows that under the influence of some facts, when the enterprise bond market come to equilibrium point what is the relationship between equilibrium rate of interest and equilibrium quantity. In the third chapter, after simply reviewing the history of our enterprise bond market, the paper researches the change of our finance system. Because of the path dependence of the institutional transition, government financing system has not been changed at all times. Government financing system is why the enterprise bond market had lagged and been restrained. Referring to the experiences of the corporate bond market in the developed countries and the burgeoning market economy counties, the paper considers that it cannot be avoided to develop our enterprise bond market. In addition, perfectly developed bond market is a multi-benefit for enterprises, banks and investors, and reduces the financial risks. Of course, the risks of the enterprise bond market must be considered carefully. Finally, in view of our real circumstances, the paper proposes an adoption of dual-track system to remove the obstacles in the way of the development of the securities markets (including the enterprise bond market). Some other measures might be done too, such as reforming enterprise property right, fostering the organized investors, ruling agency behavior etc.