The Perceived Bond Market Development in Nepal

Abstract

The objective of this study is to investigate the impact of independents variables: interest rate, inflation, credit rating, banking industry and economic growth, with dependent variable, bond market. Economic growth variable analysis is based upon secondary data, whereas apart from that variable, all other variables are based upon secondary data. Number of respondents selected for primary data are 100 respondents. They are distributed and collected by personal visit form researcher and by using online google sheets. As per the secondary data, reports from Nepal Rastra Bank and Security Board of Nepal for real gross domestic product and listed value of bond from 2001/02 to 2017/18.This study is based on quantitative analysis by converting the qualitative data into quantitative data form for primary data. Two major statistical tools, i.e. Pearson’s correlation and simple linear regression approach, is used for measuring the relationship between the independent variables and dependent variables. Pearson’s correlation coefficient concluded that there is a positive and significant relationship between decrease in interest rate, decrease in inflation rate, credit rating and banking industry for primary data analysis and moreover, all have significant and positive beta coefficient. As per secondary data, Pearson’s correlation coefficient concludes that there is significant and positive correlation between real gross domestic product and listed value of bond. And like wise, regression model shows there is positive and significant beta coefficient of real gross domestic product with respect to listed value of bond. Hence, this study concludes that there is positive relationship between credit rating, banking industry and economic growth with respect to bond market. While, interest rate and inflation are inversely related with respect to bond market. Such that, government, issuer and investors plays a vital role in bond market. In essence, least developed country like Nepal has still undeveloped bond market. If these above variables managed appropriately by relevant regulator, development of bond market in Nepal does not take long. Hence, above five determinants perceived the development of bond market in Nepal. Key word:Bond market,interest rate,inflation rate,banking industry,economic growth rate.