Foreign Participation in Emerging Markets’ Local Currency Bond Markets

By S. Peiris. Social Science Research Network, 2010

110 citations recorded by the source corpus.

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.

View Paper: https://www.semanticscholar.org/paper/28bcf45d657059063f671331269c7305ba2e50f7

Citations in the corpus

• Tracking Global Demand for Advanced Economy Sovereign Debt (2012, unknown): “Peiris (2010), based on a similar study for 10 emerging market economies, has found similar results regarding foreign participation in local-currency government bond markets.”
• Government Bonds and Their Investors: What are the Facts and Do They Matter? (2012, unknown): “Anecdotal and empirical evidence has motivated the hypothesis that non-resident demand reduces yields while inducing volatility in response to changes in fundamentals and market sentiment (Beltran et al., 2012; Peiris, 2010).”
• Bond Yields in Emerging Economies: It Matters What State You are in (2012, unknown): “Baldacci and Kumar (2010) estimate a panel of 31 advanced and emerging economies over the period 1980–2007 and also find that higher fiscal deficits and public debt raise long-term domestic bond yields in both advanced and emerging markets, with an impact similar to that found by Peiris (2010).”