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Innovation and the entrepreneurial state in Asia : mechanisms of bond market development
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Rethel, Lena and Sinclair, Timothy J. (2014) Innovation and the entrepreneurial state in Asia : mechanisms of bond market development. Asian Studies Review, 38 (4). pp. 564-581. doi:10.1080/10357823.2014.956685 ISSN 1035-7823.
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Official URL: http://dx.doi.org/10.1080/10357823.2014.956685
Abstract
Bond markets have expanded rapidly in emerging East Asian economies in recent years. Asian policymakers have played a pivotal role in this development. This process presents an interesting challenge to the developmental state literature associated with bank-based financial systems. We argue that it is best to understand the role of the state as an entrepreneurial state in the construction of these markets, focusing on institutional innovation in three mechanisms of state-led market infrastructure: national or local credit rating agencies, mortgage corporations and bond pricing agencies. National credit rating agencies rate the creditworthiness of debt in local currency. Mortgage corporations create markets in securitised housing loans. Bond pricing agencies put a value on illiquid debt instruments to enable mark-to-market portfolio management. Together, these three mechanisms constitute the core determinants of the market (demand for creditworthy products, supply of tradeable assets, and the fixing of a price to those assets). In so doing they influence the nature of market operations, producing outcomes very different from the free market ideal type. We also consider cross-country commonalities and variations in this general pattern.
Item Type: | Journal Article | ||||||
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Divisions: | Faculty of Social Sciences > Politics and International Studies | ||||||
Journal or Publication Title: | Asian Studies Review | ||||||
Publisher: | Routledge | ||||||
ISSN: | 1035-7823 | ||||||
Official Date: | 2014 | ||||||
Dates: |
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Volume: | 38 | ||||||
Number: | 4 | ||||||
Page Range: | pp. 564-581 | ||||||
DOI: | 10.1080/10357823.2014.956685 | ||||||
Status: | Peer Reviewed | ||||||
Publication Status: | Published | ||||||
Access rights to Published version: | Restricted or Subscription Access |
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