Chinese Bond Market and Interbank Market

67 Pages Posted: 19 Feb 2019

See all articles by Marlene Amstad

Marlene Amstad

Harvard Kennedy School; The Chinese University of Hong Kong, Shenzhen

Zhiguo He

University of Chicago - Finance

Date Written: February 2019

Abstract

Over the past twenty years, especially the past decade, China has taken enormous strides to develop its bond market as an integral step of financial reform. This paper aims to provide the most up-to-date overview of Chinese bond markets, by highlighting two distinct and largely segmented markets: Over-the-Counter based interbank market, and centralized exchange market. We explain various bond instruments traded in these two markets, highlighting their inherent connection with the banking system, and many multi-layer regulatory bodies who are interacting with each other in an intricate way. We also covers the credit ratings and rating agencies in Chinese market, and offer an account of ever-rising default incidents in China starting 2014. Finally, we discuss the recent regulatory tightening of shadow banking since late 2017 and its impact on bond investors, and the forces behind the internalization of Chinese bond markets in the near future.

Suggested Citation

Amstad, Marlene and He, Zhiguo, Chinese Bond Market and Interbank Market (February 2019). NBER Working Paper No. w25549, Available at SSRN: https://ssrn.com/abstract=3336500

Marlene Amstad (Contact Author)

Harvard Kennedy School ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

The Chinese University of Hong Kong, Shenzhen ( email )

Zhiguo He

University of Chicago - Finance ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

HOME PAGE: http://www.zhiguohe.com

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