ADB Assistance for Domestic Capital Market Development | Asian Development Bank

ADB Assistance for Domestic Capital Market Development

Evaluation Document | 30 September 2008

This evaluation assesses the performance of ADB's public and private sector assistance related to the development of policy, legal and regulatory frameworks, and institutions for stock and bond markets from 1986 to 2006.

Efficient capital markets, including stocks and bonds, are essential for mobilizing the long-term capital economies need to sustain growth; they support corporate initiative, finance new ideas, and help manage financial risk.

Yet, while a number of developing countries in Asia had capital markets two decades ago, particularly in South and Southeast Asia, most were poorly capitalized at less than 10% of gross domestic product, with the exception of the Republic of Korea and Thailand.

This study assesses Asian Development Bank (ADB) assistance for capital markets in the two decades from 1987 to 2006, with the focus on more recent years. In that time, ADB financed 36 loan projects in 14 countries totalling $9.2 billion and 109 technical assistance projects in 20 countries for $59.9 million that fully or partly pursued capital market development objectives. The study was based on findings from country studies in Indonesia, Mongolia, Pakistan, Philippines, Sri Lanka, and Viet Nam, which accounted for two-thirds of ADB lending to the sector.

Assistance was rated as borderline successful, indicating scope for improvement. Among the findings, the study notes that ADB did not have a corporate‐level strategy to guide its financial sector assistance, meaning that operational priorities were determined at the country level. The study therefore recommended that ADB develop a financial sector strategy providing a consistent analytical and operational framework.

In addition, the study notes that most of ADB's assistance focused on developing regulatory frameworks, and found the majority of this effectively established the legal basis for securities market operations. It strengthened the capacity of regulatory authorities and improved the governance and self‐regulation of stock exchanges.


  • Executive Summary
  • Introduction
  • ADB Strategies and Assistance Programs for Capital Market Development
  • Evaluation of ADB Assistance
  • Overall Assessment, Lessons, Issues, and Recommendations
  • Appendixes
  • Supplementary Appendixes