What drove the corporate bond markets in Asia after 1995

We investigate the development of corporate bond markets in 10 Asian countries from 1995 to 2014. Using data on outstanding value and total issue of bonds by financial and non-financial companies, we confirm that macroeconomic and institutional factors are related to the depth of the corporate bond market. We show that creditor rights and institutional quality are important in explaining the size of outstanding value and issuance of corporate bonds. Furthermore, we determine a strong positive association between the level of domestic credit and the outstanding value and issue of corporate bonds. From the results, we surmise that there is a positive relationship between the development of the corporate bond market and the banking sector. These findings indicate that increased demand for bank loans induced the issuance of bonds by financial institutions, which, in turn, might have led to the development of corporate bond markets in Asia. Finally, we document that the development of corporate bond markets might have helped mitigate the outcome of the financial crisis of 2008 in Asia.