Development Finance via Diaspora Bonds: Track Record and Potential
A diaspora bond is a debt instrument issued by a country - or potentially, a sub-sovereign entity or a private corporation - to raise financing from its overseas diaspora. Israel and India have raised $35-40 billion using these bonds. Drawing on th...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2004/08/8066254/development-finance-diaspora-bonds-track-record-potential http://hdl.handle.net/10986/14311 |
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okr-10986-14311 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
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English en_US |
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ACCOUNTING ASSET CLASS ASSET-BACKED SECURITIES BALANCE OF PAYMENTS BALANCE OF PAYMENTS CRISIS BANK DEPOSITS BANK OF ISRAEL BANK POLICY BASIS POINTS BOND BOND ISSUANCE BOND ISSUE BOND SALES BONDS BORROWER BORROWING BORROWING COSTS BORROWING POLICY BORROWINGS BROKERS BULLET REPAYMENT BUSINESS LAW CAPITAL MARKET CDS CENTRAL BANK CENTRAL BANK OF SRI LANKA CERTIFICATES OF DEPOSITS CLASS ACTION COMMERCIAL BANKS COMPETITIVE BIDDING COMPETITIVENESS CONTINGENT LIABILITIES CONTRACT ENFORCEMENT CONTRIBUTIONS CORPORATE BONDS COUNTRY RISK CREDIT RATING CREDIT RATINGS CREDITWORTHINESS CURRENCY CURRENCY DEVALUATION DATED SECURITIES DEBT DEBT INSTRUMENT DEBT MARKET DEBT SERVICE DEBT SERVICE PAYMENTS DEFAULT PROBABILITIES DEFAULT RISK DEPOSIT DEPOSITS DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT BOND DEVELOPMENT BONDS DEVELOPMENT FINANCE DISCLOSURE REQUIREMENTS DOMESTIC BANKS DOMESTIC INVESTORS EAST EUROPEAN ECONOMIC IMPLICATIONS EXCHANGE COMMISSION EXPOSURE EXTERNAL DEBT EXTERNAL FINANCE EXTERNAL FINANCING EXTERNAL INDEBTEDNESS FEDERAL RESERVE FINANCIAL COMPANIES FINANCIAL CRISIS FINANCIAL INSTRUMENTS FINANCIAL RESOURCES FINANCIAL RETURNS FINANCING REQUIREMENT FIXED RATE FIXED RATE BONDS FLOATING RATE FLOATING RATE DEBT FLOW OF CAPITAL FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY DEPOSITS FOREIGN DEBT FOREIGN EXCHANGE FOREIGN EXCHANGE RESOURCES FOREIGN FINANCING FUND INVESTMENTS FUTURE RESEARCH GLOBAL ECONOMIC PROSPECTS GOVERNANCE INDICATOR GOVERNMENT BONDS HOME COUNTRY HOST COUNTRIES HOUSING INCOME INCOME FLOWS INCOMES INFLATIONARY EXPECTATIONS INFORMED INVESTORS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL INVESTMENTS INTERNATIONAL INVESTORS INTERNATIONAL TRANSACTIONS INVESTING INVESTMENT OPTIONS INVESTMENT VEHICLES INVESTOR BASE INVESTOR INTEREST ISLAMIC BOND ISLAMIC BOND ISSUANCE ISLAMIC BOND MARKET ISLAMIC BONDS ISLAMIC DEBT ISLAMIC FINANCE ISLAMIC LAWS ISSUANCE JURISDICTIONS LEGAL SYSTEM LEGAL SYSTEMS LIQUIDITY LOANS FROM BANKS LOCAL CURRENCY MARKET INTEREST MARKET INTEREST RATES MARKET PRACTICE MARKET PRICE MARKET PRICING MARKETING MARKETING STRATEGY MATURITIES MATURITY MIGRATION MISMANAGEMENT MONETARY FUND NATIONAL BANKS PER CAPITA INCOMES PRESS RELEASE PRIME RATE PURCHASES RATING AGENCIES REAL ESTATE REDEMPTION REGULATORY REQUIREMENTS REGULATORY SYSTEMS REMITTANCE REMITTANCES REPAYMENTS RESERVES RETAIL INVESTORS RETURN RETURNS RISK MANAGEMENT RISK OF DEFAULT RISK PREMIUM SALE SAVINGS SAVINGS RATE SECONDARY MARKET SECURITIES SECURITIES LAW SECURITIES LAWS SECURITIES REGULATION SENIOR SHORT-TERM DEBT SKILLED WORKERS SMALL BANKS SOVEREIGN ENTITY SOVEREIGN RISKS STATE BANK STOCKS SUKUK TIME DEPOSITS TRACK RECORD TRACK RECORDS TREASURY TRINIDAD AND TOBAGO UNDERWRITERS WEALTH ZERO COUPON |
| spellingShingle |
ACCOUNTING ASSET CLASS ASSET-BACKED SECURITIES BALANCE OF PAYMENTS BALANCE OF PAYMENTS CRISIS BANK DEPOSITS BANK OF ISRAEL BANK POLICY BASIS POINTS BOND BOND ISSUANCE BOND ISSUE BOND SALES BONDS BORROWER BORROWING BORROWING COSTS BORROWING POLICY BORROWINGS BROKERS BULLET REPAYMENT BUSINESS LAW CAPITAL MARKET CDS CENTRAL BANK CENTRAL BANK OF SRI LANKA CERTIFICATES OF DEPOSITS CLASS ACTION COMMERCIAL BANKS COMPETITIVE BIDDING COMPETITIVENESS CONTINGENT LIABILITIES CONTRACT ENFORCEMENT CONTRIBUTIONS CORPORATE BONDS COUNTRY RISK CREDIT RATING CREDIT RATINGS CREDITWORTHINESS CURRENCY CURRENCY DEVALUATION DATED SECURITIES DEBT DEBT INSTRUMENT DEBT MARKET DEBT SERVICE DEBT SERVICE PAYMENTS DEFAULT PROBABILITIES DEFAULT RISK DEPOSIT DEPOSITS DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT BOND DEVELOPMENT BONDS DEVELOPMENT FINANCE DISCLOSURE REQUIREMENTS DOMESTIC BANKS DOMESTIC INVESTORS EAST EUROPEAN ECONOMIC IMPLICATIONS EXCHANGE COMMISSION EXPOSURE EXTERNAL DEBT EXTERNAL FINANCE EXTERNAL FINANCING EXTERNAL INDEBTEDNESS FEDERAL RESERVE FINANCIAL COMPANIES FINANCIAL CRISIS FINANCIAL INSTRUMENTS FINANCIAL RESOURCES FINANCIAL RETURNS FINANCING REQUIREMENT FIXED RATE FIXED RATE BONDS FLOATING RATE FLOATING RATE DEBT FLOW OF CAPITAL FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY DEPOSITS FOREIGN DEBT FOREIGN EXCHANGE FOREIGN EXCHANGE RESOURCES FOREIGN FINANCING FUND INVESTMENTS FUTURE RESEARCH GLOBAL ECONOMIC PROSPECTS GOVERNANCE INDICATOR GOVERNMENT BONDS HOME COUNTRY HOST COUNTRIES HOUSING INCOME INCOME FLOWS INCOMES INFLATIONARY EXPECTATIONS INFORMED INVESTORS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL INVESTMENTS INTERNATIONAL INVESTORS INTERNATIONAL TRANSACTIONS INVESTING INVESTMENT OPTIONS INVESTMENT VEHICLES INVESTOR BASE INVESTOR INTEREST ISLAMIC BOND ISLAMIC BOND ISSUANCE ISLAMIC BOND MARKET ISLAMIC BONDS ISLAMIC DEBT ISLAMIC FINANCE ISLAMIC LAWS ISSUANCE JURISDICTIONS LEGAL SYSTEM LEGAL SYSTEMS LIQUIDITY LOANS FROM BANKS LOCAL CURRENCY MARKET INTEREST MARKET INTEREST RATES MARKET PRACTICE MARKET PRICE MARKET PRICING MARKETING MARKETING STRATEGY MATURITIES MATURITY MIGRATION MISMANAGEMENT MONETARY FUND NATIONAL BANKS PER CAPITA INCOMES PRESS RELEASE PRIME RATE PURCHASES RATING AGENCIES REAL ESTATE REDEMPTION REGULATORY REQUIREMENTS REGULATORY SYSTEMS REMITTANCE REMITTANCES REPAYMENTS RESERVES RETAIL INVESTORS RETURN RETURNS RISK MANAGEMENT RISK OF DEFAULT RISK PREMIUM SALE SAVINGS SAVINGS RATE SECONDARY MARKET SECURITIES SECURITIES LAW SECURITIES LAWS SECURITIES REGULATION SENIOR SHORT-TERM DEBT SKILLED WORKERS SMALL BANKS SOVEREIGN ENTITY SOVEREIGN RISKS STATE BANK STOCKS SUKUK TIME DEPOSITS TRACK RECORD TRACK RECORDS TREASURY TRINIDAD AND TOBAGO UNDERWRITERS WEALTH ZERO COUPON Ketkar, Suhas L. Ratha, Dilip Development Finance via Diaspora Bonds: Track Record and Potential |
| relation |
Policy Research Working Paper;No.4311 |
| description |
A diaspora bond is a debt instrument
issued by a country - or potentially, a sub-sovereign entity
or a private corporation - to raise financing from its
overseas diaspora. Israel and India have raised $35-40
billion using these bonds. Drawing on their experiences,
this paper discusses the rationale, methodology, and factors
affecting the issuance of diaspora bonds for raising
external development finance. The Government of Israel has
offered a flexible menu of diaspora bonds since 1951 to keep
the Jewish diaspora engaged. The Indian authorities, in
contrast, have used this instrument for balance of payments
support, to raise financing during times when they had
difficulty in accessing international capital markets.
Diaspora bonds are often sold at a premium to the diaspora
members, thus fetching a "patriotic" discount in
borrowing costs. Besides patriotism or the desire to do good
in the investor's country of origin, such a discount
can also be explained by the fact that diaspora investors
may be more willing and able to take on sovereign risks of
default in hard currency as well as devaluation as they may
have local currency liabilities and they may be able to
influence the borrower's decision to service such debt.
The paper discusses several conditions for successful
diaspora bond issuance having a sizeable diaspora,
especially first-generation migrants, is understandably an
important factor affecting the issuance of diaspora bonds.
Countries with strong and transparent legal systems for
contract enforcement are likely to find it easier to issue
such bonds. Absence of civil strife is a plus. While not a
pre-requisite, presence of national banks and other
institutions in destination countries facilitates the
marketing of bonds to the diaspora. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Ketkar, Suhas L. Ratha, Dilip |
| author_facet |
Ketkar, Suhas L. Ratha, Dilip |
| author_sort |
Ketkar, Suhas L. |
| title |
Development Finance via Diaspora Bonds: Track Record and Potential |
| title_short |
Development Finance via Diaspora Bonds: Track Record and Potential |
| title_full |
Development Finance via Diaspora Bonds: Track Record and Potential |
| title_fullStr |
Development Finance via Diaspora Bonds: Track Record and Potential |
| title_full_unstemmed |
Development Finance via Diaspora Bonds: Track Record and Potential |
| title_sort |
development finance via diaspora bonds: track record and potential |
| publisher |
World Bank, Washington, D.C. |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2004/08/8066254/development-finance-diaspora-bonds-track-record-potential http://hdl.handle.net/10986/14311 |
| _version_ |
1764430900577173504 |
| spelling |
okr-10986-143112021-04-23T14:03:21Z Development Finance via Diaspora Bonds: Track Record and Potential Ketkar, Suhas L. Ratha, Dilip ACCOUNTING ASSET CLASS ASSET-BACKED SECURITIES BALANCE OF PAYMENTS BALANCE OF PAYMENTS CRISIS BANK DEPOSITS BANK OF ISRAEL BANK POLICY BASIS POINTS BOND BOND ISSUANCE BOND ISSUE BOND SALES BONDS BORROWER BORROWING BORROWING COSTS BORROWING POLICY BORROWINGS BROKERS BULLET REPAYMENT BUSINESS LAW CAPITAL MARKET CDS CENTRAL BANK CENTRAL BANK OF SRI LANKA CERTIFICATES OF DEPOSITS CLASS ACTION COMMERCIAL BANKS COMPETITIVE BIDDING COMPETITIVENESS CONTINGENT LIABILITIES CONTRACT ENFORCEMENT CONTRIBUTIONS CORPORATE BONDS COUNTRY RISK CREDIT RATING CREDIT RATINGS CREDITWORTHINESS CURRENCY CURRENCY DEVALUATION DATED SECURITIES DEBT DEBT INSTRUMENT DEBT MARKET DEBT SERVICE DEBT SERVICE PAYMENTS DEFAULT PROBABILITIES DEFAULT RISK DEPOSIT DEPOSITS DEVALUATION DEVELOPING COUNTRIES DEVELOPMENT BOND DEVELOPMENT BONDS DEVELOPMENT FINANCE DISCLOSURE REQUIREMENTS DOMESTIC BANKS DOMESTIC INVESTORS EAST EUROPEAN ECONOMIC IMPLICATIONS EXCHANGE COMMISSION EXPOSURE EXTERNAL DEBT EXTERNAL FINANCE EXTERNAL FINANCING EXTERNAL INDEBTEDNESS FEDERAL RESERVE FINANCIAL COMPANIES FINANCIAL CRISIS FINANCIAL INSTRUMENTS FINANCIAL RESOURCES FINANCIAL RETURNS FINANCING REQUIREMENT FIXED RATE FIXED RATE BONDS FLOATING RATE FLOATING RATE DEBT FLOW OF CAPITAL FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY DEPOSITS FOREIGN DEBT FOREIGN EXCHANGE FOREIGN EXCHANGE RESOURCES FOREIGN FINANCING FUND INVESTMENTS FUTURE RESEARCH GLOBAL ECONOMIC PROSPECTS GOVERNANCE INDICATOR GOVERNMENT BONDS HOME COUNTRY HOST COUNTRIES HOUSING INCOME INCOME FLOWS INCOMES INFLATIONARY EXPECTATIONS INFORMED INVESTORS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL INVESTMENTS INTERNATIONAL INVESTORS INTERNATIONAL TRANSACTIONS INVESTING INVESTMENT OPTIONS INVESTMENT VEHICLES INVESTOR BASE INVESTOR INTEREST ISLAMIC BOND ISLAMIC BOND ISSUANCE ISLAMIC BOND MARKET ISLAMIC BONDS ISLAMIC DEBT ISLAMIC FINANCE ISLAMIC LAWS ISSUANCE JURISDICTIONS LEGAL SYSTEM LEGAL SYSTEMS LIQUIDITY LOANS FROM BANKS LOCAL CURRENCY MARKET INTEREST MARKET INTEREST RATES MARKET PRACTICE MARKET PRICE MARKET PRICING MARKETING MARKETING STRATEGY MATURITIES MATURITY MIGRATION MISMANAGEMENT MONETARY FUND NATIONAL BANKS PER CAPITA INCOMES PRESS RELEASE PRIME RATE PURCHASES RATING AGENCIES REAL ESTATE REDEMPTION REGULATORY REQUIREMENTS REGULATORY SYSTEMS REMITTANCE REMITTANCES REPAYMENTS RESERVES RETAIL INVESTORS RETURN RETURNS RISK MANAGEMENT RISK OF DEFAULT RISK PREMIUM SALE SAVINGS SAVINGS RATE SECONDARY MARKET SECURITIES SECURITIES LAW SECURITIES LAWS SECURITIES REGULATION SENIOR SHORT-TERM DEBT SKILLED WORKERS SMALL BANKS SOVEREIGN ENTITY SOVEREIGN RISKS STATE BANK STOCKS SUKUK TIME DEPOSITS TRACK RECORD TRACK RECORDS TREASURY TRINIDAD AND TOBAGO UNDERWRITERS WEALTH ZERO COUPON A diaspora bond is a debt instrument issued by a country - or potentially, a sub-sovereign entity or a private corporation - to raise financing from its overseas diaspora. Israel and India have raised $35-40 billion using these bonds. Drawing on their experiences, this paper discusses the rationale, methodology, and factors affecting the issuance of diaspora bonds for raising external development finance. The Government of Israel has offered a flexible menu of diaspora bonds since 1951 to keep the Jewish diaspora engaged. The Indian authorities, in contrast, have used this instrument for balance of payments support, to raise financing during times when they had difficulty in accessing international capital markets. Diaspora bonds are often sold at a premium to the diaspora members, thus fetching a "patriotic" discount in borrowing costs. Besides patriotism or the desire to do good in the investor's country of origin, such a discount can also be explained by the fact that diaspora investors may be more willing and able to take on sovereign risks of default in hard currency as well as devaluation as they may have local currency liabilities and they may be able to influence the borrower's decision to service such debt. The paper discusses several conditions for successful diaspora bond issuance having a sizeable diaspora, especially first-generation migrants, is understandably an important factor affecting the issuance of diaspora bonds. Countries with strong and transparent legal systems for contract enforcement are likely to find it easier to issue such bonds. Absence of civil strife is a plus. While not a pre-requisite, presence of national banks and other institutions in destination countries facilitates the marketing of bonds to the diaspora. 2013-07-01T17:32:56Z 2013-07-01T17:32:56Z 2004-08 http://documents.worldbank.org/curated/en/2004/08/8066254/development-finance-diaspora-bonds-track-record-potential http://hdl.handle.net/10986/14311 English en_US Policy Research Working Paper;No.4311 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research |