Malaysia’s Domestic Bond Market : A Success Story
Many emerging markets and developing economies (EMDEs) face challenges in developing a vibrant domestic bond market. Only a few have developed such markets to a level of full maturity as Malaysia has. Although the overall size of most domestic corp...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/150131601443507839/Malaysia-s-Domestic-Bond-Market-A-Success-Story http://hdl.handle.net/10986/34538 |
| Summary: | Many emerging markets and developing
economies (EMDEs) face challenges in developing a vibrant
domestic bond market. Only a few have developed such markets
to a level of full maturity as Malaysia has. Although the
overall size of most domestic corporate bond markets in
EMDEs (in terms of percentage to GDP) remains small, the
Malaysian capital market is one of the most well-developed
among its neighbors and countries of comparable size and
characteristics. The IMF’s Financial Market Index, a
broad-based index to measure depth, ease of access, and
efficiency of financial markets (IMF 2016), ranks the
Malaysian financial market fifth in Asia after Hong Kong
SAR, China, Japan, the Republic of Korea, and Singapore.
According to this index, Malaysia’s debt market, which is
composed of corporate bonds and sukuk, is significantly more
developed than those of comparable EMDEs such as Chile and
Turkey. This report primarily focuses on the development of
Malaysia’s local bond market as a source of long-term local
currency (LCY) financing. It aims to extract the key lessons
that can benefit policy makers as well as stakeholders in
both the public and private sectors. This report validates
the worth of the building blocks many use for capital market
development, as well as the fundamental principles and
forces that have shaped and sustained the growth of
Malaysia’s debt capital market. Malaysia’s ability to
develop specific segments of the debt capital market can be
best demonstrated through two specific cases: the domestic
debt capital market has played a vital role in financing
Malaysia’s infrastructure, and Malaysia has played a
significant role as an Islamic finance center. |
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