The Risk Of Emerging East Asian Bond Market Research

It has been widely recognized the necessity of the development of local bond market. After the Asia crisis, people realized that a deep and healthy local bond market was able to reduce the degree of the mismatch of currency and tenor. Due to the promotion of local government, bond market in Asia achieved a great development.However, during the evolution of local bond market, there comes the risk (F·H·Knight call it uncertainty) concurrently. The paper aims to discuss the root of the risk of East Asia bond market using a framework of info-institution-financial risk.The conclusion is that the risk can be attributed to the serious information asymmetry and the absence of the institution arrangement to alleviate the asymmetry in East Asia bond market. Although the institutional arrangement and institutional structure can be set up during process of institutional change, the external the internal flaw of the institution results in the institution risk. Meanwhile, the risk will always be there during the process of institution change in East Asia bond markets.