Diaspora Bonds: Tapping the Diaspora During Difficult Times

Journal of International Commerce, Economics and Policy (JICEP), 2010

Posted: 22 Aug 2011

Date Written: October 1, 2010

Abstract

India and Israel have raised over US$35 billion by tapping into the wealth of their diaspora communities. These diaspora bonds represent a stable and cheap source of external finance, often when countries lost access to international capital markets. For diaspora investors, these bonds offer the opportunity to help their country of origin while also providing an investment opportunity. The potential for diaspora bonds is significant for many countries with large diasporas abroad. However, diaspora bond issuance from countries with weak governance and high sovereign risk may require support for institutional capacity building and credit enhancement from multilateral or bilateral agencies. Haiti, for instance, could raise several hundred million dollars by issuing diaspora bonds provided a guarantee structure is created to build trust in the country's public institutions.

Keywords: Capital flows, diaspora bonds, emerging markets

Suggested Citation

Ratha, Dilip and Ketkar, Suhas L., Diaspora Bonds: Tapping the Diaspora During Difficult Times (October 1, 2010). Journal of International Commerce, Economics and Policy (JICEP), 2010, Available at SSRN: https://ssrn.com/abstract=1913988

Dilip Ratha (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Suhas L. Ketkar

Vanderbilt University ( email )

2301 Vanderbilt Place
Nashville, TN 37240
United States

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