Developing Bond Markets for Sustainable Growth of East Asia

Kyeong-Hoon Kang

Assistant Professor, College of Business Administration, Dongguk University, 26, 3-ga, Pil-dong, Seoul 100-715, Korea, Tel: +82-2-2260-8909 khkang@dongguk.edu

JEL Classificaion: G18, L10

Abstract

Though corporate bond markets can play important roles for East Asia's sustainable growth, it is very difficult to build a well-functioning corporate bond market. One of the reasons for the difficulty is that the hurdles to be overcome are closely related each other, resulting in a chicken or egg problem. This paper shows that the chicken or egg problem may come from externalities in corporate bond markets and analyzes the interaction of the externalities: dynamic externality and static network externality. Some policy implications are drawn from the results.

Keywords:

Corporate bond markets, Chicken or egg problem, Interaction of externalities, Dynamic externality, Static network externality

Acknowledgments

Paper presented at the 14th Seoul Journal of Economics International Symposium held at Seoul National University, Seoul, 24 November 2006.

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