The Growth of the Swedish Corporate Bond Market

Abstract

Abstract: Since the early 2000s the Swedish corporate bond market has experienced a significant growth. This study does, through a quantitative method, research and discuss the factors that are the main drivers of growth in the Swedish corporate bond market and how they are related. The study focuses on the development since 2007, as the prior available data is limited. Initially, a literature review indicated that the Swedish central bank rate and the Basel Accords were the main drivers of growth. These two factors were therefore chosen as independent variables and were tested against the dependent variable, issued amount of bonds in SEK, in a number of regression analyses. The study's two propositions were; the central bank rate is a main driver for the growth in the Swedish corporate bond market, and the Basel Accords are main drivers for the growth in the Swedish corporate bond market. The first proposition, that the central bank rate is a main driver for the growth in the Swedish corporate bond market, was rejected as no significance in the regression analyses could be seen. The second proposition, that the Basel accords are main drivers of growth in the Swedish corporate bond market, was supported as significance between the issuance of bonds and the Basel variables (with time lags) could be seen in the regression analyses. As the study found support for this proposition it indicates that regulations have triggered a market development. Thus the Basel accords seem to have triggered growth in the Swedish corporate bond market.