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DISSERTATION PROPOSAL
ON
VIETNAMESE CORPORATE BOND MARKET:
THE CAUSES OF UNDERDEVELOPMENT
BY
ABCDEF ABCDEF
ID: 123456789
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Table of contents
1.6.0 Resources 10
References 11
Appendix 1 12
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1.1.0 Background
There have been a lot of studies on the role of corporate bond market.
Hankansson (1999) showed that an economy with a developed corporate
bond market has stronger market discipline than an economy in which bank
financing plays the central role. A developed corporate bond market entails
greater disclosure of information and transparency, a strong community of
professional financial analysts, good rating agencies, a large number of
corporate debt instruments leading to the rising demand for credit analysis,
and efficient corporate reorganization or liquidation processes, allowing
market forces to function more effectively. As a result of the effective
corporate bond market, the systemic risk and the probability of a crisis may
be lowered. Diamond (1991) and Rajan (1992) mentioned the cost
advantages of borrowing in the bond market over bank lending. On
condition that banks’ loans are decided based on firms’ creditworthiness,
the bond issuance allows the firm to avoid the monitoring costs for banks
and to reduce the information rent possibly charged by banks.
In the case of Vietnam rated as the BB-credit country, bank lending and
equity finance are the major financing options for the corporate sector.
Although the private Small-and-Medium-sized-Enterprise sector is regarded
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as the main source of Vietnamese sustainable growth in the long run, using
those financing options in large scale has been out of small firms’ reach
(Vuong, quan Hoang and Tran, Tri Dung, 2010).
The Vietnamese corporate bond market has witnessed the strong growth
particularly since Vietnam entered WTO. However, this market still remains
underdeveloped with the small size compared to government bonds or the
very tiny percentage of GDP. Up to now, there have been about 63 firms
issuing 152 bonds, accounting for 31.5% of the 200 largest corporations of
Vietnam and a small portion of 350,000 enterprises existing in Vietnam. It
is obvious that Vietnamese corporate bond market is now dominated by
State-owned Enterprises and large corporations, which keeps SMEs from
this debt financing option (Vuong, Quan Hoang and Tran, Tri Dung, 2010).
Listed corporate bonds may be traded in the secondary market on the Hanoi
Security Trading Center or HCMC Stock Exchange. However, the secondary
market is still small and illiquid with a few players; and the majority of
corporate bonds issued are unlisted.
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obstacles for the development of Japanese corporate bond market in
particular and financial markets in general. Some impediments for corporate
bond issuance in corporate bond markets include poor credit ratings, strict
rules and procedures which result in the limited quality bond issuer supply.
“Inadequate market infrastructure including competitive auctions secondary
market trading systems, and clearing and settlement systems” and a
narrow investor base caused by limited savings schemes, undeveloped
investment trusts, the over-regulated asset management industry and the
limitation in insurance companies’ role are other impediments that need to
be considered.
Krishnan Sharma (2000) also issued the paper focusing on “the underlying
institutional constraints to corporate bond market development in Thailand,
Malaysia and Indonesia”. The results of the paper showed that the close and
“interlocking relationships” among corporations, banks and governments
were one of the main reasons for the underdevelopment of the demand side
of the corporate bond market and have prevented companies from issuing
bonds. Based on the results, the author recommended the strong
institutional change as the major solution to develop the corporate bond
market in those countries besides the measures to strengthen market
infrastructure.
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Vietnamese corporate bond market structure
Regulatory Framework
Opportunities and challenges
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1.3.2 Research objectives
To achieve the first objective, the researcher will analyse existing data sets
related to Vietnamese bond market and Vietnamese corporate bond market
and compare those data with ones about other developed corporate bond
markets to prove the underdevelopment of Vietnamese corporate bond
market.
In terms of the second objective, the researcher will make use of some
literature and surveys. Interviews and questionnaire items will be designed
so as to collect data on the experts’ assessment about Vietnamese
corporate bond market and the reasons making this market underdeveloped
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Secondary data, for examples, statistics about Vietnamese corporate bond
over the past years, will be collected from some sources such as Ministry of
Finance of Vietnam, IMF, World Bank, ANZ, Vietnamese Bond Market
Association, and previous studies. In addition, the researcher will deliver 50
questionnaires to financial lecturers at Academy of Finance and financial
employees in large companies, SMEs, and financial organizations, for
examples, Vietnamese Bond Market Association, World Bank in Vietnam,
BIDV, Vietcombank, Bao Minh Insurance Corporation. Five interviews will be
also conducted with the financial managers of above publicly listed
companies and financial organizations.
These methods are used with the purpose of examining the situation of
Vietnamese corporate bond market over the past twenty years and finding
out the reasons for the weaknesses of this market.
After accomplishing the data collection stage, the researcher will flexibly
choose the method to analyse data under the instructor’s guidance.
Nvivo software and Statistical Package for Social Science software may be
used to analyse responses to questions of questionnaires and interviews if
the researcher is instructed to get to know how to use these programs.
The researcher guarantees the authorized access to the secondary data and
the permission of respondents before carrying out surveys like interviews
and questionnaires. The name of or other confidential information about the
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respondents will not also be required as that is unnecessary for data
analysis or viability of the study.
This study is divided into four stages and the duration of each stage in
particular and that of the study in general are predicted as follows:
1.6.0 Resources
The researcher’s research process will be carried out with the resources
such as a laptop computer, an electronic voice recording device, internet,
online library, and finance.
The researcher also requires the support of the instructor Peter Sorensen,
the lecturer of Academy of Finance. In particular, the researcher needs the
instructor’s guidance of how to use software to analyse data, for examples,
Nvivo, SPSS, or others.
References
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1. Hakansson, Nils H. (1999) The Role of a Corporate Bond Market in
an Economy -- and in Avoiding Crises. UC Berkeley: Research Program
in Finance. Available from: <http://escholarship.org/uc/item/6sq4c6g0>
2. Diamond,D.W. (1991) Monitoring and Reputation: The Choice between
Bank Loans and Directly Placed Debt. Journal of Political Economy,
99(4), pp. 689–721.
3. Rajan, R.G. (1992) Insiders and Outsiders: The Choice between Informed
and Arm’s Length Debt. Journal of Finance 47(4), pp. 1,367–1,400.
4. Ong, Li L. and Luengnaruemitchai, Pipat. (2005). An Anatomy of
Corporate Bond Markets: Growing Pains and Knowledge Gains. IMF
Working Papers No. 05/152, July, pp.1-25 (25)
5. Sharma, Krishnan (2000). The Underlying Constraints On Corporate
Bond Market Development in Southeast Asia. United Nations DESA
Working Paper No. 14, September, pp 1405 – 1419. Available from:
<http://www.elsevier.com/locate/worlddev>
6. Vuong, Quan Hoang and Tran, Tri Dung (2010). Corporate bond
market in the Transition Economy of Vietnam, 1990-2010. Centre
Emile Bernheim Working Paper Series: WP-CEB No. 10/001. Université Libre
de Bruxelles.
7. Jonathan A. Batten, and Peter G.Szilagyi. (2003) Why Japan needs to
develop its Corporate Bond Market. Economics of Business, Vol. 10, No.
1, pp. 83–108.
Appendix 1:
LOCAL LEVEL APPROVAL: POSTGRADUATE RESEARCH PROJECT
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Low risk project involving human subjects
Name: ABCDEF
Programme: MAITF
Signed Date
Supervisor’s agreement
Name Signature Date
……………
This form will be retained for the purposes of assurance of compliance and audit for the duration of the
research project and for five calendar years thereafter.
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