A framework for benchmarking the strategic position of bond markets in the competing environment

Abstract

Purpose The purpose of this paper is to develop a benchmarking framework for identifying different indicators and their importance in forming the strategic position of Thai bond markets in competitive economies using Strategic Position and Action Evaluation (SPACE) matrix framework. Design/methodology/approach The Delphi approach is deployed for indicator selection and the framework validation. A questionnaire survey is then used to assess the importance of different factors determining the strategic bond market development and competitiveness using the Analytic Hierarchy Process (AHP) model. Findings A group of experienced bond market experts assign different levels of importance for each key factor under a given dimension to reach consensus. The results reveal that there are 17 factors affecting the strategic development and competitiveness of the bond market. Among four aspects under the framework, the financial strength dimension is considered by the experts as the most dominant aspect to strategic bond market development, followed by competitive advantage, industry strength, and environment stability, respectively. Practical implications The benchmarking framework developed in this study is useful for guiding measurement and assessment of the strategic position of bond markets in the competing environment. Originality/value The author proposes for the first time a conceptual framework based on macro-level data to assess the strategic bond market development and competitiveness using SPACE matrix method. The study employs the Delphi’s technique and in-depth interview with bond market experts to build indicators for each dimension under the framework. Second, this paper also applies the AHP to discover the order of relative importance for the indicators identified by the experts through pairwise comparison to reach consensus, which has never been conducted before.

A Preference for Corporate Borrowing in Alternative Markets over Borrowing from Banks under the Impact of Monetary Policies: a Lithuanian Case

“…With reference to the corporate finance theory, market imperfections such as underdeveloped financial systems, information asymmetry or institutional regulation and interference may constrain companies' abilities to fund their investment (Bokpin, 2010;Sukcharoensin, 2017). As noted by Fama (1985), banks play an important role in business financing as they possess a comparative advantage in monitoring of corporate borrowers.…”

“…General economic determinants cover the general economic development of a country, the level of stock market development, the size of the banking sector and the level of financial market development. The significance of the environment surrounding a company, including the general health of the economy, was emphasised by Antoniou et al (2002), Bokpin (2010), Misati and Nyamongo (2012), Thukral et al (2015), Sukcharoensin (2017) and many other authors. Developed economies ensure openness of capital markets and promote transparency of business financial behaviour (Mutenheri & Green, 2003).…”

“…Theoretical explanation of the impact of stock markets on business finance choice was provided by Booth, Aivazian, Demirguc-Kunt, and Maksimovic (2001), Bokpin (2010), Ahmed and Mmolainyane (2014), Francis et al (2015), Hutchinson et al (2016), Sukcharoensin (2017) and many other researchers who note that developed stock and equity markets are a viable option of corporate financing. The research conducted by Genenc (2003) provided the empirical evidence that the level of a stock market development is one of the main determinants of business capital structure choice in Turkish firms.…”

“…Financially capable companies can afford to choose any sources of funding regardless of their costs Bokpin, 2010;Strickland, 2013;Zabala & Josse, 2014;Sukcharoensin, 2017 Availability of different sources of financing For financially weak, young and risky companies issuance of bonds can be the only available source of external financing Datta et al, 2000;Spr cic & Wilson, 2007 The need to diversify sources of funding…”

“…According to Spr cic and Wilson (2007), companies in advanced countries have mixed capital structures, whereas companies in less advanced countries mostly depend on bank credits and loans. The reason for dependence on bank funding lies in the fact that corporate bonds are profitable only to large companies with a high credit rating (Datta, Iskandar-Datta & Patel, 2000;Spr cic & Wilson, 2007;Sukcharoensin, 2017), while small and medium companies-as well as large companies with lower credit ratings-find bank loans to be a more attractive method of external financing (Thukral et al, 2015;Sukcharoensin, 2017).…”