Global Financial Cycle,Bond Market Development and Cross-Border Bond Fund Flows
Facing the increasingly complex external financial environment,exploring the ways to handle global financial cycle is of great significance for China's high-level financial opening-up to the outside world.This paper mainly examines the impact of the global financial cycle on cross-border bond fund flows in 50 countries from 2004 to 2022,and the role of the development of bond markets in buffering the global financial cycle.The results of this paper showed that tightening of the global financial cycle can lead to a decrease in cross-border bond fund inflows for a country,but the improvement of the development level of the bond market will alleviate the negative impact caused by the tightening of the global financial cycle.Mechanism analysis shows that the development of the bond market has an impact through liquidity channels.Economies with high liquidity premiums can better cushion the negative effects of global financial cycles in their bond markets.The higher the proportion of foreign investors in an economy,the stronger the negative impact of the global financial cycle on bond market development.In addition,the development of the local currency bond mar-ket will increase the sensitivity of domestic cross-border bond funds to the global financial cycle,but diversification of investor structure will significantly reduce this sensitivity.The above analysis and conclusion are of great significance in clarifying the development of the bond market and its contri-bution to China's high-level opening-up to the outside world.
Global Financial CycleDevelopment of the Bond MarketCross-Border Bond Fund FlowsInvestor Struc-ture