The History Of Chinese Enterprise Bond Market Development Since Reform And Opening-up In China

Since the reform and opening-up policy, structure of Chinese capital market is undergoing constant improvement and deepening. As an important part of the capital market, bond market, especially the enterprise bond market lags behind. The enterprise bond market is the market which developed first during initial period of the reform and opening-up. For various reasons it didn't run smoothly. The beginning of the enterprise bond market's development has a good beginning with increasing scale and proper varieties which meet the demands of the enterprises. However, there were no rules to follow and some misunderstanding. This financing tool's flaw is enlarged unceasingly, which hinders development of the entire capital market. At that time, Chinese economy was in the early period of the transition. The policy of the government was still characterized by planning. For example, examination and approval of the enterprise bond, release scale, formulation standard of the interest rate, and so on are regulated and intervened by administrative means which result in ineffective implementation of the enterprise bond tool's financing function. At the same time, the country has given priority to stock market in design planning of the capital market structure. Consequently, enterprise bond market has not been paid full attention.With a new round of financial reform, the enterprise bond market obtains the society's attention. It is recognized that development of the enterprise bond market can improve the structure of the capital market and prevent financial risks. On the one hand, establishment of a standardized and effective enterprise bond market helps Chinese enterprises improve the capital structure and strengthen hard budget constraints to enhance the competitiveness of the enterprises; on the other hand it helps reduce bank credit risks, improve the financial system, and optimize investor portfolio so that resources are efficiently used. As a mature financing way, the enterprise bond has all sorts of advantages, which causes the enterprise bond market to face a new round restarting.This study attempts to divide history of the enterprise bond market's development into three stages and summarizes the historical characteristics of the enterprise bond market's development. The first stage is the initial stage (1984-1992), the second stage is the reorganization stage (1993-1998), and the third stage is the standard development phase (1999 to the present). This study deals with historical development of Chinese enterprise bond market and unfolds development of Chinese enterprise bond market from planned economy to market economy.The present study adopts horizontal and vertical historical comparative analysis methods and supply and demand analysis to find out the reasons why the development of our enterprise bond market lagged behind. The most important factor is institutional restriction, that is, government's administrative intervention plays a part in the entire process of enterprise bond operation. Intervention in various aspects such as the enterprise bond's release, subject of investment, specified amount of release, way of release, issue price, financing use causes the function of this financing tool to have the flaw and reduces the enthusiasm of enterprise to choose the enterprise bond as the direct finance tool. The research indicates that a consummate enterprise bond market should be a market with diversification of bond variety. Different bond varieties can meet financing needs of different types of enterprises and different investors. However, in reality, the release subject in Chinese enterprise bond market is unitary, the release profession is too concentrative, and the subjects of investment are not very widespread, which have seriously restricted innovation of the enterprise bond's types and functions, made release scale of the enterprise bond difficult to expand and impeded transaction of the enterprise bond market. Although institutional reform and innovation of Chinese enterprise bond has been advancing unceasingly, its speed cannot follow the requirements of the market development. Therefore, the institutional factor is still an important factor which impedes development of Chinese enterprise bond market.This study also analyzes intermediaries of the enterprise bonds market and their roles historically. Standardization of the intermediaries, professionalism of securities operating units, credit rating organization, accountant's office and lawyer's office will be conducive to improvement of the enterprise bond types and structure of market system.The research comes to the conclusion that supervisory department's cooperation is indispensable for benign development of the enterprise bond, consummation of related enterprise bond system and policy system is the basic condition for the development of the enterprise bond market, and increasing debt financing demand is the motivation for the development of the enterprise bond market. With the improvement of Chinese finance infrastructure, standardization of the intermediaries, and support of better interior and the external environment, the enterprise bond's importance will receive due attention, and the enterprise bond types and structure of market system will be improved gradually.With the deepening reform of the enterprise bond market, operation management of the enterprise bond market will also be standardized, which will promote its function in the capital market and even the entire national economy.