Edited by Yung Chul Park, Takatoshi Ito and Yunjong Wang
Chapter 17: How to Mobilize Asian Savings within the Region: Securitization and Credit Enhancement for the Development of East Asia’s Bond Market
17. How to mobilize the Asian savings within the region: Securitization and credit enhancement for the development of East Asia’s bond market Gyutaeg Oh, Dae Keun Park, Jaeha Park and Doo Yong Yang 1. INTRODUCTION The way and structure of capital movement in East Asia present highly signiﬁcant implications on the development of East Asia’s capital market. Traditionally, capital inﬂows in most East Asian countries except for Japan consisted of public ﬁnancing and bank loans. With the turn to the 1990s, capital inﬂows started to take various forms, as investors from advanced economies diversiﬁed their assets internationally. The changes in the form of capital ﬂows in East Asia have been induced by both push and pull eﬀects. That is to say, with low interest rates and dropping asset investment returns due to economic slowdown in advanced economies, investors’ demand for investment in emerging market portfolio began to soar. At the same time, major East Asian countries relaxed their regulatory measures on foreigners’ portfolio investment through capital liberalization, further spurring the changes in the form of capital inﬂow into East Asia. On the other hand, the Asian crisis in 1997 has brought signiﬁcant changes to the form of capital ﬂows in East Asia, and to the structure of capital market in the region. One of the biggest changes in the capital movement in East Asia and development of the East Asian capital market is the current account surplus of most major East Asian countries,...
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