Factors affect the Malaysian secondary bond market liquidity

Yong, Hua Yeo (2023) Factors affect the Malaysian secondary bond market liquidity. [Dissertation (University of Nottingham only)]

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This paper is intended to investigate the factors that have a significant impact on bond market liquidity in Malaysia. This study develops both internal bond characteristics and overall macroeconomics factors that may affect bond liquidity. According to research, Malaysia's bond market is underdeveloped in comparison to the equity market, despite the fact that in other countries, bonds serve as a relatively cheap source of capital for the borrower and a fixed income earning investment for the investor. However, this will only be possible if the bond market provides sufficient liquidity to the investor.

This study develops standards for identifying 5 internal characteristic factors which greatly influence liquidity.

1. Tenure to Maturity

2: Issuance Size

3: Structure of the bond

4: Credit Rating of the Bond

5: Coupon Rate

Worth mentioning as well, the importance of Secondary Bond Market Liquidity in Malaysian Bond market, the roles of government in participating in the financial market, and what public expectation towards achieving the goal of bond market liquidity issue.

Analysis Results

The case studies were examined using statistical analysis of empirical data and the identification of common themes from quantitative reports. The bond turnover ratio is used as a proxy for liquidity, and the impact of various factors is measured using various analyses. The results of statistical tests show that the credit rating of the bond and the coupon rate are statistically significant factors explaining the liquidity of the Malaysian bond market. This dissertation will provide us with a clear understanding of Malaysian secondary bond market liquidity, and it aims to provide insight into what accounts for Malaysian secondary bond market liquidity.

Item Type: Dissertation (University of Nottingham only)
Depositing User: Yong, Hua
Date Deposited: 24 Feb 2023 11:29
Last Modified: 24 Feb 2023 11:29
URI: https://eprints.nottingham.ac.uk/id/eprint/71255

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