The Development of Local Debt Markets in Asia: An Assessment

Mangal Goswami, Sunil Sharma
JEL codes: 
ADBI Working Paper Series

The paper gives an assessment of the progress made in developing local debt markets in
emerging Asia. Market development has been limited by hurdles confronting borrowers and
lenders, current and potential liquidity providers, and insufficient support from government
policies and regulations. Besides fostering a credit culture to deepen local debt markets, the
issue of critical size can be addressed through an integrated regional market for local
currency bonds that provides greater scale, efficiency, and access. With rapid economic
growth in Asia, a key challenge is to generate financial assets that can provide the
underlying collateral for expanding fixed-income markets, and hence domestic and regional
investment opportunities.