ADB has been playing a catalytic role in developing domestic bond markets in its member countries in view of new economic trends in the region, including the (i) huge financing requirements of massive infrastructure projects; (ii) declining fund flows from bilateral and multilateral development agencies; (iii) financial weakening of banking institutions due to non- performing real estate loans; (iv) move from equity to debt instruments for corporate financing; and (v) shift in sources of bond financing from international to domestic markets.
For those economies affected by the Asian financial crisis, asset securitization represents a critically important process in restructuring bank assets. Banks in financial distress can improve their capital adequacy and liquidity ratios by selling their assets, both performing and nonperforming, through asset securitization. In response to this need, ADB undertook a regional study to examine the feasibility of creating mortgage-backed securities markets in the People's Republic of China, India, Indonesia, Republic of Korea, Malaysia, Pakistan, Philippines, and Thailand.
Until this study was made, there had been no thorough examination of the reasons why the mortgage-backed securities markets have not developed, nor of the feasibility of introducing mortgage-backed securities in the region's bond markets.
