A Taste for Dim Sum: Analysing the Financial Diffusion in the New Offshore Renminbi Debt Securities

Fong, T., Mizen, P. and Tsoukas, S. (2018) A Taste for Dim Sum: Analysing the Financial Diffusion in the New Offshore Renminbi Debt Securities. Working Paper. Hong Kong Institute for Monetary Research.

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Periodically a major financial innovation creates a new product class that changes the financial landscape. Examples include junk bonds that enabled leveraged buyouts, securitization that stimulated off balance sheet growth in banks, and credit default swaps that offered pure trading in credit risk. Now new renminbi financial products are emerging as China opens its capital account, providing new opportunities for innovation in corporate finance that will promote financial stability and sustainable growth in China. This study illustrates the rapid growth in the use of these new products by Chinese and overseas firms. We use diffusion models to explore how participation in this market is influenced by greater depth and liquidity of the market, lower costs of issuance and greater expected appreciation of the renminbi against the US dollar. Understanding these offshore developments will help support smoother innovation in the onshore corporate bond market.

Item Type:Research Reports or Papers (Working Paper)
Additional Information:HKIMR Working Paper No.14/2018
Glasgow Author(s) Enlighten ID:Tsoukas, Professor Serafeim
Authors: Fong, T., Mizen, P., and Tsoukas, S.
Subjects:H Social Sciences > HG Finance
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Publisher:Hong Kong Institute for Monetary Research
Published Online:01 May 2018
Copyright Holders:Copyright © 2018 Hong Kong Institute for Monetary Research
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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