Foreign Participation in Emerging Markets’ Local Currency Bond Markets

April 1, 2010

Preview Citation

Format: Chicago

Shanaka J Peiris. Foreign Participation in Emerging Markets’ Local Currency Bond Markets, (USA: International Monetary Fund, 2010) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper estimates the impact of foreign participation in determining long-term local currency government bond yields and volatility in a group of emerging markets from 2000-2009. The results of a panel data analysis of 10 emerging markets show that greater foreign participation in the domestic government bond market tends to significantly reduce long-term government yields. Moreover, greater foreign participation does not necessarily result in increased volatility in bond yields in emerging markets and, in fact, could even dampen volatility in some instances.

Subject: Bond yields, Currencies, Financial institutions, Financial markets, Financial services, Money, Securities markets, Sovereign bonds, Yield curve

Keywords: Bond market, Bond market imbalance, Bond Markets, Bond yield, Bond yields, Currencies, Emerging market, Emerging Market Economies, Global, Government bond, Government bond bond market, Government bond bond yield, Securities markets, Sovereign bonds, WP, Yield curve, Yield volatility, Yields in EMs

Publication Details

Pages:

20
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/088
Stock No:

WPIEA2010088
ISBN:

9781451982602
ISSN:

1018-5941

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