Development of Bond Market based on the Economy of Nation

The main goal of this report is to examine the structural, financial, developmental, institutional and macroeconomic factors influencing the development of bond market. This report gives a brief discussion of the variables: size of the economy, openness to trade, english legal origin, separation from equator, GDP per capita, quality of institutions, size of banking framework, banking concentration, capital controls, interest rates volatility, exchange rate volatility, interest rate spread and fiscal balance that affects the bond market development. The basic relationship (positive, negative or no impact) of each variable with the sample (bond market development) are deduced theoretically, analytically and taking into consideration many studies and experiments. It mainly focuses on three main factors, which are the size of the economy, trade openness and size of the banking framework. A comparative study of the effect of these three factors on the bond markets of the given nations: India, USA and China is given.