Although the growing literature on the importance of finance in economic growth contrasts
bank-based financial systems with market-based financial systems, little attention has been paid to the
role of the bond market. Correspondingly the role of the bond market has been very small relative to
that of the banking system or equity markets in most Asian emerging economies. We argue that the
underdevelopment of Asian bond markets has undermined the efficiency of these economies and
made them significantly more vulnerable to financial crises....