The Determinants of Government Bond Market Development in Asean+3

This study aims to demonstrate the determinants of government bond market development in ASEAN+3 countries. The data is collected from 3 non-ASEAN countries and 6 ASEAN countries. There are eight factors being considered as the size of the economy, exchange rate fluctuation, the level of financial integration, the fiscal balance, banking size, deposit and lending interest rates spread, the level of monetary freedom and the stage of country’s development. The results show the positive impact of economic size, integration level and stage of development on government bond market’s size. In contrast, the balance of state budget and the interest spread have significant negative influence on the development of government bond market. This paper could not find significant relationship between exchange rate variability, banking size and size of this market. The research’s results are suggestion to develop government bond market in ASEAN+3 countries and for further researches in the future.