Park, Donghyun; Tian, Shu; Wu, Qiongbing2021-10-052021-10-052020-03N/AN/A2313-65372313-6545https://www.adb.org/publications/bank-efficiency-bond-markets-asia-pacifichttps://hdl.handle.net/20.500.14540/5815This paper examines the association between bond market development and profit and cost efficiency of commercial banks, based on bank-level data from 27 economies in the Asia and Pacific region. The study finds that bond market size and structure are relevant to bank efficiency. A larger bond market is generally associated with higher profit efficiency and lower cost efficiency of commercial banks. Given bond market size, a larger share of corporate bonds will enhance both bank profit and cost efficiency. The policy implications of this paper are that balanced and well-developed capital markets will benefit banking sector operations.36Finance sector developmentFinancial institutions and servicesFinancial marketsFormal banking institutions