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Asia-Pacific Development Journal

The Asia-Pacific Development Journal (APDJ) is published twice a year by the United Nations Economic and Social Commission for Asia and the Pacific. The primary objective of the APDJ is to provide a platform for the exchange of knowledge, experience, ideas, information and data on all aspects of economic and social development issues and concerns facing the region and aims to stimulate policy debate and assist policy formulation. The APDJ provides a scholarly means for bringing together research work by eminent social scientists and development practitioners from the region and beyond for use by a variety of stakeholders. The Journal aims to stimulate policy debate and assist policy formulation in the region.

English

Capital market development and emergence of institutional investors in the Asia-Pacific region

Bank credit is traditionally the largest source of finance in the Asia-Pacific region, but the role of capital markets has increased over time. There is substantial heterogeneity across countries. For capital markets to develop further, macroeconomic stability, strong property rights and enforcement of securities laws have been identified as particularly important considerations, together with building a state-of-the-art financial infrastructure, including trading platforms and clearing and settlement systems, and transparent information-sharing arrangements. Institutional investors tend to have long-investment horizons and, as such, contribute to the stability of the local market. It may therefore be appropriate to explore ways to increase their presence in the domestic bond and equity markets. Two possible approaches to accomplish this are to promote savings through national pension funds and insurance companies and to encourage the participation of foreign institutional investors in the domestic market by making it more accessible to them while at the same time being mindful of the risks to domestic financial stability associated with greater openness to international capital flows. Policymakers may also explore ways to take advantage of the emerging field of impact investment to support funding for projects that are intended to generate environmental and social impacts.

English

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