In early 2016 Research Republic was commissioned by the City of London Corporation to conduct a study investigating the development of credit markets across the world in order to identify suitable policy measures and reforms to enable market growth and expansion via increased international accessibility. Today the City of London Corporation has published the report: Improving International Access to Credit Markets. The study found that since the 2008 crisis, credit markets, and innovations in credit markets, have played an increasingly important role in the global financial system. This has been largely driven by two factors: the tightening of bank lending due to the demands of recapitalisation and new regulation, and an increasing demand for credit in emerging economies.
As part of the study a Credit Market Assessment Framework was developed, this allowed for the detailed examination of credit markets in 59 countries. The countries selected account for 91% of global corporate bond insurance, and 87% of global GDP. The findings demonstrate clear trends in the growth and development of well-functioning credit markets, illustrating key areas that must be addressed for each country. It also highlighted that developing countries must focus attention on developing stronger legal systems, better bankruptcy and insolvency processes, and a broader investor base. Most importantly the analysis identified particular countries with the highest capacity to grow their credit markets, using debt finance to support economic growth.
The in-depth examination of 11 case study countries – China, Germany, India, Japan, Mexico, Nigeria, Norway, Singapore, UK, USA and Vietnam – identified the use of specific credit instruments, and highlighted the key challenges in each market. Many of the developed countries in this sample are in the process of deleveraging, but it is in these particular markets where there is considerable innovation. The report identifies 3 significant areas of innovation: Capital Markets Union, peer-to-peer lending, and green bonds - all of which are responsive solutions to the current economic climate.
The report, Improving International Access to Credit Markets, is authored by Research Republic Ltd and published by the City of London Corporation today (14 June 2016). It is available to download here. A one-page summary of the report's key findings can be found here. Dr Iain Clacher, one of the co-authors of the report , has also written a blog piece for the City of London Corporation here.