• Natalja Tocelovska
  • Biruta Sloka
  • Ilja Arfejevs



The development of the corporate bond market in Latvia while being quick and robust in the period 2012-2017 (the average growth rate 131%, median 44%), has faced major challenges in 2018 (Nasdaq Baltic, 2018). The latter has demonstrated the vulnerability of this alternative to banking financing method in Latvia. In the environment, where the ongoing changes in the banking financing as initiated by the Basel III and Capital Markets Union initiatives, besides to the decision on creation of pan-Baltic capital market with the support of the European Commission and the European Bank for Reconstruction and Development, are bringing more emphasis on the increasing role of the corporate bond market in Latvia; the need to understand its development and factors affecting this development is essential.

The goal of this article is to explore the corporate bond market development frameworks as elaborated by the academic research and recognise corporate bond market development determinants, identify the determinants of the corporate bond market in Latvia by running the statistical analysis. Tasks of the research include examining types of corporate bond development frameworks with the focus on revealing the determinants of the corporate bond market development as recognised by the academics, performing the econometric analysis of the determinants selected and building an econometric model of the determinants of the development of the corporate bond market in Latvia as well as drawing corresponding conclusions. In order to accomplish the tasks of the research the following research methods were used: analysis of the previously performed research, analysis of the legislative framework; quantitative research methods: statistical data analysis of macroeconomic data from Bank for International Settlement, The World Bank Database, Bloomberg and Reuters databases; financial market indicator and data analysis from Nasdaq Baltic, Bank for International Settlement, Treasury of the Republic of Latvia, Bloomberg and Reuters databases; correlation analysis, regression analysis.

In the result of the analysis, the determinants of the corporate bond market development in Latvia were analysed, where 27 factors as detected by the theoretical analysis to be influencing the corporate bond market development in a country were applied to Latvia. The regression analysis has demonstrated the influence of Gross Domestic Product (GDP) per capita, amount of domestic savings, real GDP growth, amount of government bonds as the share of GDP and regulatory quality on the amount of the corporate bonds outstanding.


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