Long period of time Essay

What Techniques does Dickens use in Great Expectations to gain and sustain his readers attention and interest, and how effective do you find these techniques? Illustrate your answer using examples from the text?  Although Great Expectations was written some 150 years ago it is still being read even today. Dickens grabs the readers attention from the very start and manages to sustain it throughout the book by using a variety of techniques which I am going to explore in more depth. The chapter begins with the introduction of Pip and saying how his name came to be. ‘My Fathers family name being Pirrip and my Christian name being Philip’ this gives the reader an impression that Pip is you’re genuinely average person and the main character will most probably be Pip as he is introduced very sharply in the opening paragraph. Dickens characterises Pip and his tone of voice as learned and precise and uses formal vocabulary which may suggest he has had a good upbringing and his family are strong on manners and respect. Pip then begins to tell the reader that he never knew his parents and has never even seen them in photos let alone real life ‘I never saw my Father or my Mother, and never saw and likeness of either of them’ Although he had never seen his Mother or Father humour and pathos combine in Pips explanation of how he formed a mental image of his parents ‘The shape of the letters on my Fathers [tombstone] gave me an odd idea that he was a square, stout, dark man with curly black hair’ Pip is shown as having a very powerful imagination and that he needed to create an image of his Father he never knew from whatever was left of him that he could find, even though it wasn’t very promising. In the third paragraph Pip begins to describe the scenery and whereabouts of his location ‘Ours was marsh country, down by the river, within, as the river wound, twenty miles of the sea’. Pip describes the area as if a camera was scanning the landscape and that we could see what he was describing which I think is very effective as it makes the reader more involved in the story as if they were there with him. Pips ‘smallness’, suffering and vulnerability is emphasised further on in the book ‘At such a time I found out for certain, that this bleak place overgrown with nettles was the churchyard ; and that Philip Pirrip, Georgiana were dead and buried and that Alexander, Bartholomew, Abraham, Tobias and Roger were also dead and buried’. This gives the reader a sense of sympathy towards Pip as most of his family are dead and that he hasn’t got much in his life. It also gives the reader an impression that Pips ‘days are few’ as his family hasn’t got a good track record of living long and this may worry Pip. The scenery ‘dark flat wilderness’ and ‘distant savage lair’ reflects Pips emotional state and feeling of no hope, which backs up the idea that Pips days are few and death may be around the corner. Dickens uses a mixture of emotions to fully gain and sustain the readers interest, and all of the characters have different personalities and physical features. Dickens also uses characternyms as a sharp way to introduce the individuality of the character and by one short phrase or even a word we can create a mental picture of what the character looks like. ‘My name is Jaggers’. The reader would feel by reading this that he is a hard, stern man with little emotion and that he has a jagged personality.  Ã¢â‚¬ËœMr Wopsle, the clerk at the church’ This is a very funny name and Dickens is trying to amuse the reader as the name isn’t very common.  Ã¢â‚¬ËœUncle Pumblechock’ This is also a very funny name and suggests he may be an arrogant person with a posh, pompous personality. Dickens mixes humour with seriousness consistently throughout the course of the book and balances this just right to keep the reader wanting to keep going on and read more. He does this throughout the description of Mrs. Joe and forces the reader into creating their own image of her by saying things which offer little help in knowing what she may look like ‘Not good looking’. This is brief but it is backed up by an in-depth description of her personality which may help the reader complete the ‘jigsaw’ in terms of Miss Joe’s appearance. He tells us. ‘She must have made Joe marry her’ and ‘had established a great reputation.. Because she had bought me up by hand’. This gives the reader a clear idea of Mrs Joes personality as from those two phrases the reader can gather that she is a very strict, temperamental and bossy woman. Dickens uses a wide variety of techniques to make his novel more enjoyable and for the reader not to want to put it down. He illustrates every scene very well by using repetition, similes and metaphors. He uses repetition as a technique to reinstate his thought and to make the reader almost feel as if he/she is there, as the point has been emphasized twice. ‘It was wretched weather; stormy and wet, stormy and wet; and mud, mud, mud deep in all the streets’ It also makes us feel as if it has been raining for a long period of time. Another example of Dickens using repetition as a technique to gain and sustain his readers attention is when Pip meets the convict who when talking to Pip uses the word and many times, this shows that he feels over-whelmed by the presence of Pip and a bit scared as he stutters to find words as he uses and a lot. ‘A fearful man all in coarse grey with a great iron on his leg. A man with no hat, and with broken shoes, and with an old rag ties round his head. A man who had been soaked in water, and smoothed by mud, and lamed by stones, and cut by flints, and stung by nettles, and torn by briars; who limped, and shivered, and glared and growled; and whose teeth chattered in his head as he seized me by the chin’. Another technique that Dickens uses to devastating effect I feel is the pace as this keeps the reader interested at all times, he builds momentum up to a particular scene by keeping a consistent pace and then slows the pace down when using very descriptive language which creates suspense for the reader and keeps the readers imagination open as to what may happen next. ‘He looked about him with the strongest air†¦. Pulled off a rough outer coat†¦. and†¦. Hat†¦. I saw that his head was furrowed and bald†¦. Long iron grey hair growing on its sides†¦. He stopped in his looking at me, and slowly rubbed his right hand over his head†¦. He sat down on a chair that stood by the fire, and covered his forehead with his large brown veinous hands’. Towards the end of the book Dickens does the opposite and uses an acceleration of pace. ‘They had pulled one sudden stroke ahead, had got their oars in, had a run thwart us, and were holding on to out gunwale, before we knew what they were doing. This shows Pip as being excited as he is rushing what he is saying as he is not describing anything in detail and can’t to say what happened. Another very good technique that dickens uses in Great Expectations is Dickens’s larger than life characters that have been exaggerated to make the story come alive and more believable. A good example is Miss Havisham, as she is regularly described by Pip as â€Å"some ghastly waxwork from the fair† and having† dark eyes†. She is also described as a â€Å"skeleton†, and someone who had â€Å"shrunk to skin and bone† and having clothes that were faded and lost their brightness. This makes the reader perceive her as a very evil and dead person.  As I can see from his wide range of techniques that are used to great effect Dickens is able to gain and sustain the readers interest from the very start and keeping it going right through to the end of the book which makes Great Expectations so well renowned even today.

Andrew Jackson Was Not a Democrat

People voted Jackson as president with the title of a democratic. He was completely the opposite; his ruling was more like the practice of tyranny. Democracy is a political system in which supreme power depends on citizens who can elect people to represent them, and believe in majority rule. Jackson’s Presidency was not democratic because he lacked the with â€Å"the power of the people† concept, He practiced the Indian Removal Act, the spoil system, and inflames the poor against the rich for the National Bank. DOC G) Democracy is basically known as power to the people, and the majority rule. Methods of electing presidential electors changed when Jackson started ruling. Even though more people were voting instead of legislative (DOC A), Natives were still not allowed to vote. The common people were universal-white-manhood which only benefitted them. (DOC B) To be democratic, all offices must fall under absolute control of the people, (DOC D) which it wasn’t. Jack son didn’t represent power to the people.When Jackson was president, they had the spoil system. The spoil system doesn’t represent democracy what so ever. In the politics of the United States, a spoil system is a system where a political party, after winning an election, gives government jobs to its voters. (DOC C) If Jackson were a true democratic, he would give jobs to people who qualified and deserve them, not just because they are of the same affiliation. (DOC I) Another reason why Jackson was not democratic is because he practiced the Indian Removal Act. DOC J) You can tell it wasn’t democracy because he had one thousand Seminoles, Choctaw, Creek, Chickasaw, and Cherokee Indians forcibly moved to Indian Territory West of Mississippi. (DOC L) In democracy, it means everyone is entitled to be equal, and Jackson sending people away and taking their land is obviously not treating someone equal. Jackson didn’t support being a democratic because (DOC F) An drew Jackson claims that out of 25 bank directors 5 are chosen by the government and 20 by the citizen stalk holders.He finds this to be an evil to our country when the majority of these people are actually chosen by stalk holders. Daniel Webster claims that Andrew Jackson seeks to inflamed the poor against the rich. (DOC G) This could disrupt a democratic society. (DOC E) The cartoon picture shows that he is willing to use his veto to just stop anything he doesn’t like. This is abuse of power. The picture also shows him as a king, we all know that a king isn’t an elected official.Jackson wasn’t a democratic because he lacked power of the people concept (DOC A,D,H,B,N), He practiced the Indian Removal Act, (DOC L,K,R,M), The spoil system,(DOC C,I) and inflames the poor against the rich for the National Bank (DOC E,F,G). The best piece of evidence that he wasn’t democratic was Jackson’s slave holdings. Jackson served as president starting in 1829. A t that time, Jackson had over 90 slaves. In the mid 30’s, Jackson owned more than 120 slaves. If he truly believed that all people deserved equal, he wouldn’t own slaves. Jackson did not practice democracy like people believed he did.

What effects does the glass ceiling have on women's career development Research Paper

What effects does the glass ceiling have on women's career development in law firms - Research Paper Example n inherent bias is indicated to exist due to the fact that even though women make up less than 10% of this industry, they are overly represented within the lower positions and a number of studies have indicated they are unlikely to be promoted throughout the course of their career; as compared to their male counterparts (Hoobler & Lemmon, 2009). Furthermore, the researcher denotes the existence of a glass cliff. Within this particular understanding and definition, a glass with merely denotes fact that women are unlikely to exist within levels of upper management and leadership as compared to their male counterparts (Wrigley, 2002). As such, whereas 10% of the total legal profession can be counted as female, a much lower percentage is able to break through the glass ceiling experiences hardship of coming into any type of position of leadership and/or power. Regardless of the factors discussed, it cannot be stated that the glass ceiling has not grown and evolved throughout the course o f the past several decades. Rather than being a static concept, this glass ceiling is redefined and re-engineered in almost every firm that it is extant within the current environment (Ragins et al., 2009). Furthermore, since it is not a static concept, many researchers argue that it is possible for the term to morph and change throughout time and within the organizations that are affected (Bruckmuller & Branscombe, 2011). Furthermore, although many changes have taken place, the glass ceiling and its traditional interpretation and implementation have remained largely unchanged. Rather than accepting its existence outright, the authors attempt to understand some of the causal mechanisms for why the glass ceiling exists and what individual employers and HR managers might do in order to...Naturally, the mere existence of such a â€Å"glass ceiling† portends a degree of sexism and bias with regards to the unwillingness of stakeholders within the employment field being willing and able to promote their female counterparts (Hogue, 2009). As a function of seeking to understand this dynamic, the following analysis will focus specifically on the field of the glass ceiling as it exists within law firms and the legal sphere. It should not be misunderstood by the reader that the glass ceiling is specific to the legal realm. Instead, a more nuanced and broad understanding of the glass ceiling within the legal field does not detract from the glass ceiling as it exists for other industries and professions; rather, it merely helps to underscore the fact that glass ceiling exists within many different professions and specialties. The gender representation within law offices around the country is recognizably skewed. Males outnumber females at a rate of nearly 10:1 in some states. This is an interesting topic as it is indicative of a more nationwide trend and less culturally dependent and/or bound than the ways that the glass ceiling might be exhibited within other secto rs of the economy (Bowling et al., 2006). Rather than accepting its existence outright, the authors attempt to understand some of the causal mechanisms for why the glass ceiling exists and what individual employers and HR managers might do in order to ameliorate its effects.

Stalin and Mussolini Essay Example | Topics and Well Written Essays - 3000 words

Stalin and Mussolini - Essay Example Some of the popular political leaders were Benito Mussolini and Joseph Stalin. Both leaders share the commonality of experiencing the climax of their political live between the 1920s and the 1950s. Thus, the regime was between the end of the First World War and the end of the Second World War. Their regimes show some sought of comparability though there is some difference in the way their performed their leadership roles. This research depicts the comparison and contrast of the leadership traits of Mussolini and Stalin. Each of these iconic leaders had a very promising past. For instance, Mussolini was a political journalist. His zeal to express anger through violence dates from the moments he was a young (Neville 53). His violent approach to the rest of the students is very compatible with the political life he engineered. A similar episode accrues to Stalin, a renowned dictator in Russia. His childhood was amplified by violence and brutality towards the rest of the children and students at the school. Arguably, the aspect of being dictators commences prior to the leadership regimes that get analyzed with regards to these leaders (Service 400). Initially, Mussolini was not a Fascist. His father was a socialist. Thus, his father gave him a name commemorating the Mexican president Benito. All his names came from socialists. However, his later experience of being in the Italian army must have facilitated some changes in him (Neville 132). Resuming to his earlier career as a teacher facilitated his active preaching of violent revolution. In fact, he gave praise to a communist Karl Marx. He was against any element of patriotism. It was this attitude that fostered Mussolini to start the fascist party that played a paramount role in drafting his future leadership. His initiated fascist squads performed perilous activities across the country such as killing approximately 2000 political opponents (Neville 95). They also

Mental Illness Case Study Example | Topics and Well Written Essays - 2500 words

Mental Illness - Case Study Example AD differs from other autism spectrum disorders because there is absence of speech or language delays and symptoms are less severe in asperger syndrome unlike other autism spectrum disorders, which have language delays and severe symptoms. AD is one of the mental illnesses commonly experienced among varied children during their childhood development process; thus, many children develop cognitive difficulties, language skill problems and lack effective nonverbal communication skills. The exact cause of AD is unknown but many researchers have attempted to base their arguments on the genetic basis as the major cause of asperger syndrome. Although there is no clear treatment for AD, cognitive behavioral therapy, social skills therapy, speech therapy, physical therapy and other intervention measures are among the effective therapies for improving symptoms and function of the patient. Mental Health History The client is a six years old child who grew up well and did not have any linguistic or speech problems but started experiencing some minor problems earlier at the age of five years. The child started having trouble in some basic elements of social skills including failure to make friendships with other children, lack of emotional reciprocity and impaired nonverbal behaviors. When the child was admitted in school, the teacher realized that the child displayed some repetitive behaviors, which were sometimes abnormal. Parents of the child also had already noticed earlier some displayed behaviors, activities and interests of the child which were repetitive but they could not take them seriously. Some of the behaviors of the child became apparent after the age of 5-6 years and this was the period their parents started seeking medical attention. For example, the child could memorize camera model figures but could care little about photography. Although these behaviors kept changing from time to time, they typically became narrowly focused and even dominated social inter action in the extent that the family members of the child became worried and stressed. According to Matson, Matson and Rivet (2007), repetitive motor behaviors are among the major symptoms for asperger syndrome but these behaviors tend to change from time to time. In addition, the client developed problems in understanding figurative language and ended up using language literary something that forced the teacher of the child to employ effective teaching intervention strategies and prepare Individualized Education programs in order to meet the demanding learning needs of the client. Although the child had excellent auditory and visual perception, some differences in perception with motor, emotion and sensory perception became apparent. The client was diagnosed and the diagnostic criteria required the treatment of the impairment social interaction, repetitive behaviors and many other problems. Rodriguez (2012) argues that employing effective diagnostic criteria and carrying out compre hensive assessment process in a multidisciplinary team approach is vital. Earlier intervention was carried out because AD does not have clear treatment but some therapies offered to the client included, Cognitive Behavioral Therapy (CBT), social skill therapy, physical, speech therapy and other intervention programs were carried out. Assessment Process The first step of diagnosis is the assessment process, which includes observation and evaluating developmental history of the child. The medical professions or qualified social workers with experience should carry out assessment process in order to determine the causes and symptoms; thus offer effective

Commodity Essay Example | Topics and Well Written Essays - 750 words

Commodity - Essay Example The most important oil producing nation in the whole world is Saudi Arabia. It is the biggest oil producing country of the world. In the year 2011, it has supplied 12.8% of global oil (Chakarova, 3). The country has got a oil reserve of 266 billion barrels (Chakarova, 3). Not only Saudi Arabia but Iran is also becoming a world leader in the crude oil supply. Iran is in a state of rapid development because of its oil reserves. Strait of Hormuz, through which 20% of world oil is supplied, is under the control of Iran. If this passage is blocked, then it would be a great problem for the whole world. As a result of which the oil prices will definitely rise. This would also require new path of delivery of oil to other countries. However, there are other countries in the middle-east which has substantial capacity of oil production. But, there are conflicts at the moment between those countries in the middle-east. This is a scary sign for the world because any conflict between these countri es would result in huge losses which the other remaining nations of the world would have to suffer. Demand of Oil in international market There is huge demand of oil in the whole world. In this modern era of rapid industrialization, it is very hard to think of running any industry without oil. However, the supply is very less as compared to the huge demand all over the world. Each year this demand is growing leaps and bounds but it is a very critical issue now to think of where from this demand be met. In the year 2004, the OECD countries consumed 48.8 mmbpd and it was 5.2% more than in the year 2003 (Cordsman and Al-Rodhan, 31). This is just a number showing the horrific nature of demand in crude oil in the world nine years ago. But the situation today is even more horrifying. It has also been seen that due to the huge industrialization process in the upcoming economies like India and China, the demand has risen even more in the past few years. The rapid development process in thes e two Asian countries would surely increase the demand as they themselves do not have any natural source of oil. All they can do is that they can import the crude oil from the middle-east countries. A graphical data is presented below showing the demand of oil based on economic growth from 2001-2025 (million barrels per day) (Cordsman and Al-Rodhan, 34). 2001 2002 2010 2015 2020 2025 LG 78 78.20 98.60 110.00 120.60 132.30 R 78 78.20 93.60 103.20 111.00 119.20 HG 78 78.20 91.10 97.20 102.30 107.70 (Source: Cordsman and Al-Rodhan, 34) Note: LG-low-growth, R- reference case, HG- high growth case. Price of oil in international market Due to the low supply, the demand for the crude oil has increased a lot in the past few years which in turn has raised the price of crude oil in the global market considerably. The developing economies of the world like India, China, etc., they are on the verge of development. As a result they are in huge demand of crude oil for their rapid industrial growt h. They need huge supply of crude oil which has made the price of oil go high in the international market. And it’s not only the price of crude oil, but the different levels of duties, processing cost, all these add up to a level which makes it a nightmare for the consumers in this era. The prices of petrol, diesel, LPG going high on a daily basis are the consequences of this. Here is a list showing the annual

Literary analysis of the play The Glass Menagerie by Tennessee Essay - 1

Literary analysis of the play The Glass Menagerie by Tennessee Williams - Essay Example Toms expresses his frustrations through his drinking and attending the movies in the evenings in addition to writing and reading poetry at work. A good amount of the play centers on Laura, however. She is tremendously shy, to some extent due to her crippling disease (pleurosis). She wore a brace on her leg and walked with a limp spending a lot of her time fantasizing about her glass menagerie. One of the central concepts this story clearly projects is the notion that the memories of our youth influence our fantasies of the present which in turn protect us from the realities of the present. Tom explicitly affirms that this is memory play in his first words, the first words of the play: â€Å"The play is a memory† (I, 145). To promote that effect, Williams continues to permit Tom to detach himself out from the play from every so often to narrate particular events or ideas, bring the audience up to speed on what has occurred in the period between two of the scenes or make other remarks. In reciting how the impression of memory is achieved, Richard Vowles (1958) describes its dreamlike characteristics, â€Å"One scene dissolves into another. There is, indeed, almost a submarine quality about the play, the kind of poetic slow motion that becomes ballet and a breathless repression of feeling that belongs to everyone but Amanda† (54). Williams illustrates the way memory has functioned to form Tom’s impression of life, never allowing him the escape he sought after through the merchant marine by sustaining the concept that almost the entire play is a Tomâ €™s memory in clear focus by means of this otherworldly light. Laura lives in possibly the most evident life of illusion as she drifts through her existence ostensibly in a cloud of detachment. She connects classical music with a happier time in her life while she connects her time in school with the ‘thunder’ of her leg brace while she struggles into her music room. She â€Å"takes refuge in

Concept on synthesis on personal nursing philosopy Essay

Concept on synthesis on personal nursing philosopy - Essay Example concepts are aimed at increasing the responsibility of practitioners in the field as well enable medical institutions set instructional requirements in the organizational setting. In general, the concepts exhaust all the factors that may affect the field of nursing. This is made possible by four way categorical division of issues that affect the field. Each concept is divided into sections that address the problems that may affect the metaparadigm. The four concepts are (Keating, 2011); Keating (2011) is of the assumption that the concepts cover the nursing field extensively in terms of providing recommendations to tackle basic nursing problems. Moreover, the issue in nursing cannot be prevented without putting them in functional categories of problem solving. For instance, it may be a hectic task to tackle the issue affects the concept of environment under the same provisions in the concept of health. This metaparadigm focuses on the challenges and issue that affect the patients in regards to service delivery. Across the field, service delivery to customer is created by the ability of a practitioner to embrace the requirements by the patient population. However, the concept seeks to understand the appropriateness of client demands. In an argument by Keith (2008) the human nature in nursing is considered under physiology, psychology, cultural, spiritual and social perceptions. The five provisions ensure service delivery is obtained without the creation of conflict with patients social affiliations. For instance, it is an obvious assumption that different social and cultural affiliations have specific social preferences. Considering the cultural depth in the modern society, a medical practitioner should be able to deal with the challenges presented by these social preferences. For example, a patient may embrace the assumption that euthanasia is against their religious views and bel iefs. A nurse should be able to understand these personal requirements and address

Negotiation Evaluation Papers Assignment Example | Topics and Well Written Essays - 2500 words

Negotiation Evaluation Papers - Assignment Example In addition to that, they reflect distinct concerns, values and motives. As a matter of fact, these varied differences allow the negotiation process to become an inquiry into finding the distinct solutions and needs that satisfies both parties. Problem solving negotiation occurs as a result of issues dealing with money. In that case, it can become a component of solution that constitutes other aspects. Negotiation can be best described as a side by side dialogue in which parties trade on their issues rather than conflicting over resources that are limited (Doye et al. 2). It is unethical to perceive negotiation as an encounter that is casual without giving it forethought. The outcome is meandering and reactive meetings rather than meetings that are proactive with certain goals in mind. Inadequate planning reflects itself at the negotiation table as parties tend to rely too much on ineffective and demands that attempts to persuade their opponent. General Information Regarding Heffen v s. Pacific These are recording companies and are having issues on who should take artistic control of the STAR album, a once known popular group. The group is comprised of four individuals namely, Sarren, Trace, Armstrong and Robins (STAR). The group regrouped itself three months ago and they are working on their second album after 15 years. However, six weeks down the line, Robin’s signs with Heffen record company a two year contract whilst the rest of the group signed contracts with Pacific Records Company. My client (Heffen records) believes that, if given the opportunity to produce the album under his label, he would manage to sell about seventy five thousand copies (75,000copies), whilst the follow up album would sell up to one million five hundred thousand copies. Each CD would cell at 15dollars thus totalling to 11.25million dollars and the follow up album accumulating 22.5million dollars. In that case, Heffen Company will be entitled to 25% of each CD gross. Neverthel ess, Heffen Company is willing to offer Pacific Record a maximum of 10%and no more than that from the total gross sell only if she is given the artistic control of the album. In addition to that, as a final resort, she would yield to giving Robins away only if Pacific Record pays 1, 000,000 dollars. This negotiation is significant to Heffen. She would have handled it herself, but as a result of the conflict between her and the president of Pacific Records Mr Paul Pack, she cannot handle it. That is why I as the third party I am involved in the negotiation process so as to arrive at a concrete solution. Preparation The Pacific Records comes to my clients company and they are given 6-10% bargain for the first year. In the second year, they are allowed to take Robin on condition that they pay 1,000,000 dollars. However, if they refuse to comply with these conditions, they will be subjected to work under their name (pacific records) but all the returns accumulated from the album sell wi ll be taken by my clients company (Heffen Company). The negotiation strategy applied to come with the above terms and conditions is the â€Å"Plan Money Moves Based on Objective Principle.† According to this strategy, money becomes the component of a solution negotiated. Similarly, better handling of monitory issues results to outcomes that are effective. For example, the negotiation between Pacific Record Company and Heffen Company agreed on various terms that are

Fast Food Nation Essay Example for Free

Fast Food Nation Essay Fast Food Is Linked to Obesity and Other Serious Health Problems Fast Food , 2009 Seth Stern is a staff writer at The Christian Science Monitor. Despite the fact that nutritional information about fast food is readily available, many fast food chains are taking the blame for the rise in obesity and other health problems across the nation. Some lawyers are considering the possibility that fast food chains could be held accountable for the health consequences of eating their food. The chains could also be responsible for the effects of their potentially misleading advertising, especially to children. These advertising messages can lead people to overeat, which is one of the reasons behind the obesity problem. For decades, Caesar Barber ate hamburgers four or five times a week at his favorite fast-food restaurants, visits that didnt end even after his first heart attack. But his appetite for fast food didnt stop Mr. Barber, who is 5 foot 10 and weighs 272 pounds, from suing four chains last month, claiming they contributed to his health problems by serving fatty foods. Legal Matters Even the most charitable legal experts give Barber little chance of succeeding. But his suit is just the latest sign that the Big Mac may eventually rival Big Tobacco as public health enemy No. 1 in the nations courts. Lawyers who successfully challenged cigarette manufacturers have joined with nutritionists to explore whether the producers of all those supersize fries and triple cheeseburgers can be held liable for Americas bulging waistlines. Prompted by reports that the nations obesity is getting worse, lawyers as well as nutrition, marketing, and industry economics experts will come together at a conference at Northeastern University in Boston to discuss possible legal strategies. Obesity can be linked to some 300,000 deaths and $117 billion in health care costs a year. Theyre looking at whether food industry marketing—particularly messages aimed at kids—may be misleading or downright deceptive under consumer protection laws, says Richard Daynard, a Northeastern law professor and chair of its Tobacco Products Liability Project. Theyll also consider the more complex question of whether the producers of fatty foods—and even the public schools that sell them—should be held responsible for the health consequences of eating them. A Toxic Food Environment Medical professionals argue that too much unhealthy food is sold by using tempting messages that encourage overeating. People are exposed to a toxic food environment, says Kelly Brownell of Yales Center for Eating and Weight Disorders. It really is an emergency. The figures are certainly startling. Obesity can be linked to some 300,000 deaths and $117 billion in health care costs a year, a report by the Surgeon General found [in 2001]. Such numbers prompted President [George W.] Bush to launch his own war on fat this summer [in 2002], calling on all Americans to get 30 minutes of physical activity each day. But fast-food industry representatives are quick to say, Dont just blame us. Steven Anderson, president of the National Restaurant Association, a trade group, says attorneys who attempt to compare the health risk of tobacco with those of fast food are following a tortuous and twisted logic. All of these foods will fit into [the] diet of most Americans with proper moderation and balance, he says. To be sure, there are big differences between tackling food and tobacco. Any amount of tobacco consumption is dangerous but everyone has to eat, Mr. Daynard says. And few if any foods are inherently toxic. Whats more, while there were only four or five tobacco manufacturers, there are thousands of food manufacturers and restaurants serving some 320,000 different products, says Marion Nestle, a professor of nutrition and food studies at New York University. People usually smoke one brand of cigarette. They eat in many restaurants and eat the same foods at home. That makes it almost impossible to prove that a persons obesity or health problems are caused by a particular food or restaurant. As a result, suits such as Barbers that attempt to pin the blame for weight-related problems on specific plaintiffs will run into difficulty in court, says Steven Sugarman, a law professor at the University of California, Berkeley. Suits by state attorneys general to try to recover the cost of treating obese patients, a tactic thats worked with tobacco, also could prove tough. Deceptive Advertising. Thats why lawyers are focusing on more modest suits aimed at advertising and marketing techniques, says John Banzhaf III, a George Washington University law professor who helped initiate the tobacco litigation three decades ago. For example, students in one of Professor Banzhafs courses helped sue McDonalds [in 2000] for advertising its french fries as vegetarian even though the company continued to use beef fat in their preparation. The company agreed to donate $10 million to Hindu and vegetarian groups as part of a settlement. But only in the past few months has Banzhaf considered similar suits as part of a concerted strategy to sue the food industry for false or deceptive advertising as a way of fighting Americans obesity. State consumer-protection laws require sellers to disclose clearly all important facts about their products. Just as a sweater manufacturer should disclose that it may shrink in the wash, Banzhaf says fast-food companies might have an obligation to disclose that a meal has more fat than the recommended daily allowance. Such class-action suits on behalf of people deceived by advertisements could recover the amounts customers spent on the food items but not money spent on related health costs. As with tobacco, marketing aimed at kids will be a particular focus of Banzhaf and his coalition of lawyers and nutritionists. Everybody is looking at children as the vulnerable point in this, says Dr. Nestle. She says shes received loads of e-mails and calls from plaintiff lawyers interested in advice since publishing Food Politics, a book critical of the food industrys marketing and its dominant role in shaping nutritional guidelines. While they know a quarter pounder is not a health food, a lot of people would be surprised to learn it uses up a whole day of calories for women. At a meeting in Boston [August 2002], Banzhaf said attorneys talked about suing Massachusetts school districts that sell fast food in their cafeterias or stock soda in their vending machines. These suits would be based on the legal notion that schools have a higher duty of care than restaurants. Fast-food restaurant chains, for their part, say theyre not hiding whats in their food. At Burger King, for example, nutritional information is supposed to be posted in every dining room. And on its website, Wendys lists 15 categories of information about its products, including total fat and calories for everything from the whole sandwich down to the pickles. Nutritionists say that the information doesnt put the calories in a context people can understand. While they know a quarter pounder is not a health food, a lot of people would be surprised to learn it uses up a whole day of calories for women, says Margo Wootan of the Center for Science in the Public Interest in Washington. Banzhaf acknowledges that litigation alone wont get Americans in better shape. Hed like nutritional information on the fast-food menu boards and wrappers or even health warnings similar to the ones now required on cigarettes. Still, Banzhaf says litigation will put producers of fatty foods on notice. When we first proposed smoker suits, people laughed too. Further Readings Books Paul Campos The Diet Myth: Why Americas Obsession with Weight Is Hazardous to Your Health. New York: Gotham, 2006. Autumn Libel Fats, Sugars, and Empty Calories: The Fast Food Habit. Philadelphia: Mason Crest, 2006. Gina Mallet Last Chance to Eat: The Fate of Taste in a Fast Food World. New York: Norton, 2004. J. Eric Oliver Fat Politics: The Real Story Behind Americas Obesity Epidemic. New York: Oxford University Press, 2006. George Ritzer McDonaldization of Society 5. Los Angeles: Pine Forge, 2008. Eric Schlosser Fast Food Nation: The Dark Side of the All-American Meal. New York: HarperPerennial, 2005. Eric Schlosser and Charles Wilson Chew on This: Everything You Dont Want to Know About Fast Food. Boston: Houghton Mifflin, 2006. Michele Simon Appetite for Profit: How the Food Industry Undermines Our Health and How to Fight Back. New York: Nation Books, 2006. Andrew F. Smith Encyclopedia of Junk and Fast Food. Westport, CT: Greenwood, 2006. Morgan Spurlock Dont Eat This Book: Fast Food and the Supersizing of America. New York: G. P. Putnams Sons, 2005. Jennifer Parker Talwar Fast Food, Fast Track: Immigrants, Big Business, and the American Dream. Boulder, CO: Westview, 2003. Tina Volpe The Fast Food Craze: Wreaking Havoc on Our Bodies and Our Animals. Kagel Canyon, CA: Canyon, 2005. Periodicals Frank Bruni Life in the Fast-Food Lane, New York Times, May 24, 2006. Steve Chapman Force-Fed the Facts, Reason, June 23, 2008. Temple Grandin Special Report: Maintenance of Good Animal Welfare in Beef Slaughter Plants by Use of Auditing Programs, Journal of the American Veterinary Medical Association, February 1, 2005. Anne Kingston and Nicholas Kohler L. A. s Fast Food Drive-by: A City Councils Ban on Fast-Food Chains Is a Provocative Social Experiment, Macleans, August 25, 2008. Laura Kipnis Americas Waistline, Slate, October 28, 2005. www. slate. com.Amelia Levin Good Food Fast, Foodservice Equipment Supplies, October 1, 2006. Sarah More McCann Wanted: Inner-City Supermarkets, Christian Science Monitor, June 27, 2008. Ruth Mortimer Why Fast-Food Brands Should Not Change Their Recipe for Success, Marketing Week, August 28, 2008. Evelyn Nieves Fla. Tomato Pickers Still Reap Harvest of Shame,' Washington Post, February 28, 2005. Jennifer Ordonez Fast-Food Lovers, Unite! Newsweek, May 24, 2004. Jonathan Rosenblum Fast Food Nation Interview: Eric Schlosser on Obesity, Kids, and Fast-Food PR, PR Watch, November 17, 2006.www. prwatch. org. Gary Ruskin and Juliet Schor Junk Food Nation, Nation, August 29, 2005. William Saletan Junk-Food Jihad, Slate, April 15, 2006. www. slate. com. San Francisco Chronicle Battle of the Bulge: Fast Food Is King at Arroyo High, June 29, 2003. Morgan Spurlock The Truth About McDonalds and Children, Independent (London), May 22, 2005. Full Text: COPYRIGHT 2005 Gale, COPYRIGHT 2006 Gale. Source Citation Stern, Seth. Fast Food Is Linked to Obesity and Other Serious Health Problems. Fast Food. Ed. Tracy Brown Collins. San Diego: Greenhaven Press, 2005. At Issue. Rpt.from Fast-Food Restaurants Face Legal Grilling. The Christian Science Monitor. 2002. Gale Opposing Viewpoints In Context. Web. 28 Aug. 2012. Document URL http://ic. galegroup. com. ezproxy. taftcollege. edu/ic/ovic/ViewpointsDetailsPage/Vi ewpointsDetailsWindow? failOverType=query=prodId=OVICwindowstate=n ormalcontentModules=mode=viewdisplayGroupName=Viewpointslimi ter=currPage=disableHighlighting=falsesource=sortBy=dis playGroups=action=ecatId=activityType=scanId=documentId =GALE%7CEJ3010311212userGroupName=taftcoll_mainjsid=3f16b8df6b867664f0 b4be12be1db146 Gale Document Number: GALE|EJ3010311212.

Government Bond Market in Nigeria

Government Bond Market in Nigeria CHAPTER 1 Background Finance plays an increasingly important role in economic growth and development of nations around the world. These roles are in many different forms, they include but not limited to channelling savings towards investment. The level of sophistication of a financial system is important and to a large extent determines the overall level of overall growth and development of that economy. The financial system contributes to economic growth performance through several mechanisms and channels à ¢Ã¢â€š ¬Ã¢â‚¬Å" mobilising savings, allocating funds to their most productive uses, monitoring productive uses i.e. investments, transferring and sharing risk (see World Bank (2001)). In modern economies, disruptions in the flow of credit from the financial system to businesses within the economy are detrimental to economic growth and can lead to a general slowdown in the level economic activities. This in turn can lead to unemployment; drop in consumer spending, consumer and industrial economic con fidence levels and ultimately a general slowdown in the economy. Capital account liberalisation in many countries and increasing levels of regional integration and globalisation add an international dimension to the flow of investments and capital around the world. These have made the transfer of funds and investment easy and accessible from one country to another. Investments and capital can be transferred around the world with fewer restrictions as barriers are being removed due to increasing impact of globalization. Since the start of the global financial crisis in 2008, the focus has increasingly been on the roles of the banking sector and the capital market in most economies. The global financial crisis caused a massive flight to safety with investor divesting from currencies, equities markets and other risky assets to the sovereign bond markets which are perceived as safe haven. Investor in major economies divested from perceived risky assets to markets where their investments are relatively safe and guaranteed. This shows one of the significance of sovereign bond market as an investment option for investors in times of crisis and how it can help to minimize the occurrence of such crisis. According to Arteta (2005), there have been many banking crises over the years in many developing countries which were very costly due to the fact that they tend to obstruct the free operations of financial intermediaries, affecting industries and the real economy. Crises can block the normal flow of credit and loans from banks to firms. The dominance of bank intermediation and the general underdevelopment of capital markets (especially the bond markets) in many developing countries aggravate the susceptibility of the real economy to episodes of banking problems. It follows that having additional sources of domestic external finance would allow firms to better withstand episodes of financial distress. By allowing firms to raise funds issuing debt securities, the existence of deep and liquid domestic capital markets would complement the availability of bank finance. By patronising this capital market option, firms would also help to deepen and broaden the market. Well diversified financial systems would lead to more efficient allocation of resources especially capital, where firms can issue bonds in domestic markets. This would enable the firms to ease maturity mismatches in their balance sheets. Thus, bond markets would lessen the effect of waning bank credit flows on firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ financing requests during periods of banking crises. Bond market has major importance in any economy but more so in emerging economy where savings and investment opportunities are inadequate. Financial sector development (more importantly for capital market) begins with the development of a sovereign bond market in many emerging economies. This is common, not only because governments are mostly the biggest domestic borrowers with the best credit ratings but also because of how their actions and inactions affect the overall level of economic development. There have been significant changes politically, economically and socially in many developing economies particularly in Africa. The financial crises of 1997-1998 (in Asia and Russia) have pointed out how vulnerable economies are when over dependent on foreign capital or banking system (Fabella and Madhur, 2003). In many emerging economies in Africa, recently there have been changes in organizational and regulatory framework of capital markets. These countries are re-strategizing in order to broaden their capital market and investors base as well as tap into the new sources of funding such as bond markets. (Brownridge, 1998). Currently, the domestic bond markets in most African economies where they exist are narrow and largely undeveloped compared to the banking system and the equity market. There are many rationales for developing a domestic bond market especially for emerging economies. First, developing a bond market will help the government to finance fiscal deficits which was done previously by forcing local banks to hold government paper, usually to meet demanding reserve and liquidity requirements. Secondly, according to Frankel (1993) in the absence of a bond market it would be difficult to sterilize large long-term capital inflows for infrastructural development. This was a difficult challenge for several central banks during the early 1990s when they had only short-term debt instruments. Sterilization that relies entirely on issuing short-term securities tends to drive up short-term interest rates while bond issuance help to minimise this risk. Thirdly, to generate a yield curve which could serve as a benchmark for investors and borrowers in the financial markets. This enables the market participants to derive the market interest rate that reflect the opportunity cost of fund at each maturity. Also, Sokoler (2002), bond market increases the competitiveness and efficiency of the financial system, which might have been dominated by few banks before the introduction of bond market. However, the effectiveness of the bond market as an alternative source of financing depends essentially on there not being a high co-movement between bank lending, bond and equity financing in a domestic setting, and the absence of contagion in the international capital markets more importantly for countries with open accounts. Bond market debt financing is necessary for developmental projects and infrastructures like electricity generation, transmission and distribution, the fuel energy sector, transportation, telecommunication, etc. 1.2 Purpose of the Study The goal is to provide a detailed review of the progress and prospects for the development of the government bond market in Nigeria with a view to identifying how the market can be broadened and deepened from both the demand and supply sides. The supply side includes the issuers of debt securities like federal government, sub-sovereigns and corporations. The demand side of the market is made up of institutional investors like banks, pension fund administrators, foreign investors, hedge funds and high net worth individuals as well as retail investors. The paper would also examine how the issuers on the supply side can take advantage of the relatively cheap sources of funding in the market against conventional funding methods as well as how the creation of alternative investment options would affect the demand side. Also, the roles and impacts of financial intermediators who facilitate the smooth operations of the market, and the perceived benefits for them (especially primary dealers) would be examined and finally the benefits for the Nigerian economy should the market be further deepened and broaden. Research Method In an attempt to provide an in-depth, objective and balanced perspective on the development of the Nigeria bond market, this project write-up draws conclusions from the various research papers and information supplied by other authors on the development on bond markets in other emerging market economies. The main factors behind the recent development of the Nigerian bond market would be explained in details by analysing information and statistics on the market. This involves the analysis of major macro-economic changes in Nigeria, pension reform, changes in debt management strategies, consolidation exercise in the banking industry etc. Statistical information provided in the dissertation have not been tested and are quoted verbatim. Outline of the Dissertation An outline of the remaining chapters is presented below: Chapter 2 reviews relevant literature on the development of bond markets especially the importance which establishes the foundation of the dissertation. The chapter also considers the main factors, trends and forces that have contributed to the development of bond market in other emerging market countries with an in-depth look at Asian and Russian markets. Chapter 3 takes a detailed look at the timeline of bond market development in Nigeria, structure, regulatory framework, regulators, the main drivers behind the growth of the market as well as the make-up of the demand and supply sides.. Chapter 4 seeks to identify and adapt the lesson in other parts of the world and concludes with the recommendations for broadening and further development of the Nigerian bond market. Chapter 5 will again highlights the importance of the study; it concludes with an overview of the recent developments in the Nigeria bond market and considers the new challenges that would emerge going forward. Chapter Two Literature Review on the development of the bond market. 2.1 Introduction This chapter reviews the literature on domestic bond market development in several emerging economies. From this review critical success factors that are prerequisite to the development of the domestic bond market will be determined. Information has been gathered by reviewing reports from government agencies, investment analystsà ¢Ã¢â€š ¬Ã¢â€ž ¢ reports, reports by the World Bank, the International Monetary Fund, African Development Bank, Asian Development Bank, Bank for International Settlement, the Emerging Markets Committee of the International Organization of Securities Commission and other bond market associations and debt management agencies. 2.2 The Development of bond markets in Emerging Markets This section examines the challenges and issues concerning domestic bond market development in many emerging markets as well as prerequisites for an efficient, broad and deep domestic bond market. There are several factors to consider. First, the financial crisis that happened between 1997-1998 reminded most policy makers around the world of the over-reliance of many emerging market economies on their respective domestic banking systems as a source of funding. Secondly, information on bond markets in emerging markets especially in sub-Saharan Africa is not readily available when compared to other developed markets or even other domestic market segments notably the equity market. 2.3 Rationale for developing a domestic bond market After the Asian and Russian financial crises of 1997-1998 many researchers have advocated for the development of domestic bond market as an alternative source of financing not only in the crisis-hit countries but for all emerging market economies where obvious shortcomings are prevalent. The following is a summary of the major arguments put forward: an alternative source of domestic debt finance fiscal deficit financing broadening and deepening of capital markets efficient risks pricing aids smooth operation of monetary policy etc. 2.3.1 An alternative source of domestic debt finance Witherell (2003) argued that bond markets reduce the over-dependence on bank credit for debt financing and that these markets also reduce the susceptibility of the economy to the risk of banking system failure. Banking crisis can have negative and adverse effects on the economy as a whole because firms and industries would find themselves credit constrained and be forced to jettison new investment spending, leading to a drop in aggregate demand through the multiplier effect. Harewood (2000) also opined that deep and efficient bond market enable firms to gain access to an alternative source of debt financing which could help banks in times of crisis to recapitalise through securitization by issuing bonds backed by non-performing loans. 2.3.2 Fiscal deficit financing Khalid (2007) argued that the benefits of developing domestic bond markets are both macroeconomic and microeconomic in nature. Within the macroeconomic perspective, the primary importance of the government bond market is to provide a channel for the financing of fiscal deficits. This is arguably the most important benefit for emerging market economies with historically large fiscal deficits and the failure of other possible sources of financing the fiscal deficits which are compelling governments to borrow from domestic markets. In addition, several countries both developed and developing have faced the need to finance very large extraordinary and unusual expenditure which are of long-term nature. The finance required for bank restructuring and long-term support for industries have been one recent example in many emerging markets. 2.3.3 Lower cost of borrowing IOSCO (2002) identified that governments and firms can enjoy lower cost of debt capital in the bank markets compared to high charges and rates offered on bank loans. This is achieved through the process of bank disintermediation which allows direct access to investors, thus removing the à ¢Ã¢â€š ¬Ã…“middlemanà ¢Ã¢â€š ¬? and related costs. Also, the issuer may tailor its asset and liability profile to minimise the risk of currency and maturity mismatch thus reducing the weighted cost of capital. 2.3.4 Broadening the capital market Debt market development helps to diversify the capital markets, reducing over-dependence on banks and susceptibility within the banking system which is positive for the entire economy at large. The bond market has provided avenues for financial engineering and innovations which have broaden the financial system in general (Akhtar 2007). A well-functioning bond market provides with investment options across a wider range of instruments including sovereign, sub-sovereign, corporate bonds and securitized obligations such as mortgage backed securities and collaterized debt obligations. The wide range of investment alternatives allows investors to make optimal asset allocation decisions. This is particularly important for investor like life insurance companies and pension fund administrators because the bond market facilitates better management of the maturity structure of their balance sheets. 2.3.5 Efficient pricing of credit risks Bond markets create cost-effective and competitive capital markets by generating market yield and interest rates that reflect the opportunity cost of capital at each tenor and maturity. This is necessary for efficient and financing decisions. Herring and Chatusripitak (2000) further stated that without a developed bond market, firms and investors would lack a clear measure of opportunity cost of funds. This may lead to mispricing of funds as was evident in late 1990s in many dynamic Asian economies suggesting that the internal discount rate may have often been too low because returns on investment fell sharply. IOSCO (2002) suggests banksà ¢Ã¢â€š ¬Ã¢â€ž ¢ interest rates are not always competitively determined so may not always reflect the true opportunity cost of funds. This is because big banks could always agree to fix rates. 2.3.6 Aids smooth operation of monetary policy The debt market is increasingly more important for the operation of monetary policy. Monetary policy now relies not only on a well functioning money market but also increasingly on indirect instruments of control like the bond market. Moreover, yields in the long-term bond market show expectations of likely macroeconomic developments and about market reactions to monetary policy moves by market regulators. 2.3.7 Promotion of financial stability The bond market provides an alternative source of funding to equity and banking financing, this alternative source enhances the stability of the financial market as a whole and efficient allocation of credit. This was evident after the Asian financial crisis the weak banking sector provided an impetus to the development of bond markets in several emerging markets. By diversifying funding sources, firms can adjust their borrowing between the banks and the debt markets (Hameed, 2007). IOSCO (2002) added that where there is no corporate bond market, a significant ratio of debt funding for corporations would come from the banking sector. By doing this, banks would assume a considerable amount of risk mainly due to the maturity mismatch between liquid short-term liabilities (deposits) and relatively long-term assets (loans). Banks cannot transfer credit risk to depositors. Herring and Chatusripitak (2000) concluded that in emerging markets where few banks dominate and account for bulk of lending activity, there is a concentration of credit risk with the banking sector. This leads to an increasing level of systemic risk in an economy. In summary, the existence of a well-functioning bond market ensures that risks are efficiently diversified within the financial system. 2.3.8 Sterilization of large capital inflows Frankel (1993), for any economy to grow and develop there is a need to sterilise large capital inflows. This was a particularly difficult challenge and difficult for several central banks in emerging economies during the first half of the 1990s. In the absence of well developed bond markets, the central bank has only short-term debt instruments at its disposal in conducting open market operations and raise fund for governments to finance developmental projects. Sterilisation that relies exclusively on issuing paper tends to drive up short-term interest rate and crowding-out effect. This risks biasing the structure of inflows towards the short end. Sterilisation through the sale of bonds reduces such risk. 2.4 Basic prerequisites for successful development of government debt markets The development of bond markets must be seen as a continuous, progressive and dynamic process in which macroeconomic and political stability are necessary to building an efficient market. Also, the credibility of the government as an issuer of debt securities must be established. World Bank (2001) noted that à ¢Ã¢â€š ¬Ã…“the prerequisites for establishing an efficient and deep government domestic currency debt market include a credible and stable government, sound fiscal and monetary policies, effective legal, tax and regulatory infrastructure, smooth and secure settlement arrangements, and a liberalised financial system with competing intermediaries. Where these basics are lacking or very weak, priority should be given to adopting and implementing stable and credible macroeconomic policy framework, reforming and liberalising in different areasà ¢Ã¢â€š ¬?. All these factors point to the creation of an enabling environment. Domestic as well as foreign investors will be unwilling to purchase government securities, especially medium- and long-term instruments when there are expectations of high inflation, large devaluations, or high risks of default like Greece recently. It is important that governments work toward macroeconomic policy framework that promotes credible commitment to prudent and sustainable fiscal policies and stable monetary conditions. Such actions will cut government funding costs over the medium to long term, as the risk premium embedded in rates and yields on government securities drop. Inflationary expectations will have impact on longer-term nominal government securities yields and affect not only government borrowing costs, but also, in countries with unstable monetary and fiscal environment, the governmentà ¢Ã¢â€š ¬Ã¢â€ž ¢s ability to extend the yield curve beyond very short maturities. Thus a credible commitment from government to contain inflation is crucial for government securities market development. The ability to attract foreign investors to a countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s debt market is to a large extent determined by the exchange rate and capital account policies of the country. Foreign investors have a major role to play in the development of government debt markets and in hastening development of the necessary infrastructure by injecting new competition into otherwise dull markets. Foreign investors will compare the yield on domestic debt with those of international markets. They will consider the default risk and the risk of exchange rate volatility. Exchange rate, capital account policies when combined with monetary and fiscal policies can affect each of these risks, and inappropriate policies can result in increased interest rate and exchange rate volatility. Such volatility impedes development of government securities issues with long maturities and can harm secondary market liquidity when there are no derivatives or complementary markets that investors can use to hedge ag ainst the risk of price movements. The soundness of the banking system also has important implications for development of the government debt market. Investor concerns about the health and soundness of the banking system will negatively affect the ability of the government to roll over or issue new debt. Furthermore, lack of financially healthy intermediaries will cause secondary market illiquidity and inefficiency. A banking system in crisis will further impede development of a government debt market and cause significant liquidity shortages. This is because important associated markets such as those for interbank and repurchase agreement transactions are unlikely to function properly. Although the challenges involved in providing the necessary macroeconomic and financial framework are enormous, these should not deter authorities. This is because the potential benefits to the government and the economy are considerable. In its role as both regulator and primary issuer, the government is a central player in the debt market. The central bank, in implementing monetary policy, will also influence market structure and inevitably market development. Given the involvement of several government agencies and entities in the process of market development, they should interact with the private sector and other market participants as this may be a useful tool to spearhead market development efforts. Harwood (2000) adds that à ¢Ã¢â€š ¬Ã…“Market participants need to evaluate the critical success factors to determine which ones constrain their marketà ¢Ã¢â€š ¬Ã¢â€ž ¢s growth and how to deal with them. Market development will be accelerated if regulators who are interested in market development work closely with market participants to identify problems and solutions with other regulators to persuade them to address problems and solutions and with other regulators to persuade them to address problems under their control.à ¢Ã¢â€š ¬? Although, there is no one size fits all framework to build a market, emerging markets should try to learn from one anotherà ¢Ã¢â€š ¬Ã¢â€ž ¢s experiences for guidance on how to develop from à ¢Ã¢â€š ¬Ã…“emergingà ¢Ã¢â€š ¬? to à ¢Ã¢â€š ¬Ã…“emergedà ¢Ã¢â€š ¬? and on what works best in what type of environment. Harwood (2000) concludes that participation in the market cannot be forced, but it can be encouraged by an enabling environment. It can also be discouraged by à ¢Ã¢â€š ¬Ã…“unablingà ¢Ã¢â€š ¬? environment. 2.5 Government securities issuance strategy and market access The process of debt issuance is an important factor in debt market development. For the market to develop, transparency and credibility of the process must be built although they take time. A market-oriented government funding strategy is an essential foundation for the growth and development of a debt market. The strategy involves the adherence to basic market principles of broad market access and transparency, a commitment to finance budget deficits through the market, and a proactive and continuous approach in developing the necessary regulatory framework to support market development. World Bank (2001,a), à ¢Ã¢â€š ¬Ã…“governments need to improve market access and transparency by providing high-quality information about debt structure, funding needs and debt management strategies to market participants and public at large. They must solicit investorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ views on the current strategy and plans for change. In this way, the government will better understand the source of demand for its instruments and have the ability to act to remove barriers obstructing investment in them.à ¢Ã¢â€š ¬? World Bank (2001,b) further states that à ¢Ã¢â€š ¬Ã…“a sound and prudent debt management operation is also central to the governmentà ¢Ã¢â€š ¬Ã¢â€ž ¢s credibility as an issuerà ¢Ã¢â€š ¬?. Having clear debt management objectives, proper coordination between debt management objectives, prudent risk management and effective institutional frameworks are essential components of sound debt management. As part of developing and maintaining a well-functioning government securities market, authorities will have to provide clear and timely information about the structure and nature of fiscal deficits and public debt as well as other Treasury operations. The information also include but not limited to amortization schedule, issuing calendar, description of outstanding securities, schedule for buybacks or re-openings where relevant, and Treasury cash balances. 2.6 Government securities instruments and yield curve One of the essential benefits of a well-functioning government securities market is to develop a set of benchmark securities. By concentrating new issues of government securities in a relatively limited number of popular, standard maturities, governments can reduce their issuing cost and boost liquidity in those maturities. Markets, in turn, can use those liquid issues as convenient benchmarks for the pricing of a range of other financial instruments. In addition, spreading the relatively few benchmark issues across a fairly wide range of maturities and tenors is generally regarded as building a à ¢Ã¢â€š ¬Ã…“benchmark yield curveà ¢Ã¢â€š ¬?. This can help to facilitate more accurate market pricing of financial instruments across a similar maturity spectrum. 2.7 Investor base for government securities Governments in many emerging market relied on captive sources of funding whereby financial institutions are required to purchase and hold government securities, often at below-market interest rates. However, this system of raising funds is fast diminishing in many of these countries. Instead, countries are developing a diversified investor base for their government securities. Investors in developed government debt market can range from small-scale retail investor to and foreign institutional investors. A diversified investor base for debt securities is necessary to high liquidity, stable demand and reasonable spread in the market. A heterogeneous investor base with different background, time horizons, expectations, risk preferences, and trading motives ensures active trading, creating high liquidity. 2.7.1 Commercial and Investment Banks Commercial and investment banks serve as both sales agentsà ¢Ã¢â€š ¬Ã¢â€ž ¢ usually primary dealers and investors in government securities in many developing economies. Banks provide valuable source of demand and liquidity for government securities market by providing two-way quotes for other investors 2.7.2 Contractual savings sector This group consist of life insurance companies and pension fund administrators contractual. This sector is a major player in the fixed income securities markets, as it provides a stable source of long-term demand. This is because of the long-term nature of funds that the sector controls. The sectorà ¢Ã¢â€š ¬Ã¢â€ž ¢s demand for fixed-interest, low-credit-risk products also provides an important basis on which to develop standardized, securitized products such as mortgage bonds. Pension funds and life insurance companies are usually required to invest a large portion of their assets in so-called gilt-edged assets. This has helped to make this sector prominent in the government securities market. 2.7.3 Collective investment funds Collective investment funds, such as mutual and hedge funds, unit trust scheme etc can play an important role in the development of the government securities market, especially the shorter-term segments of the market because of the nature of funds that they manage. They offer retail and other investor alternative investment option other than investing in bank products. This helps to induce more competition in this part of the financial sector, and can be a cost-effective way for the government to reach retail investors. These collective investment funds that are established domestically or offshore help to deepen the securities market and should be allowed participate actively in the market.. 2.7.4 Retail investors Retail investors are a source of stable demand to the government securities market which could be crucial in times of high volatility. Demand from retail investors can help to cushion the impact of sales by institutional and foreign investors. In order to develop a diversified investor base for government securities the needs of retail investors should be incorporated into the overall strategy of market development. 2.7.5 Foreign investors Foreign investors are important source of demand and innovation to national capital markets, including government securities markets. They have received much attention in both mature markets and developing countries because of issues like regulation, capital flight, entry and exit barriers, etc. They have contributed positively to the development of government securities market in several countries through the positive pressure they place on the quality and services of intermediaries and their emphasis on sound, safe and robust market infrastructure. Foreign investors could be in many forms like emerging markets funds, such as some hedge funds and other specialized closed and open-end country or emerging-market funds. They also include crossover investors, such as pension funds and insurance companies not as dedicated to investing in a particular region or even country, and other more specialized investors like distressed asset funds, private capital fund etc. 2.8 Other bond markets 2.8.1 Introduction Various studies have been carried on bond market development in different parts of the world. For example Batten and Fetherston (2003) for Asian economies, Sylla (2001), World Bank and International Monetary Fund (2001), etc. BIS (2002) also reviews the experience of many emerging economies in the development of debt markets. The review shows to varying degrees the three main factors that delayed the development of bond market in most emerging economies namely: a bank-centered financial system, opaque corporate governance and borrowing in low interest rate currencies. This section will look at the experience of other bond markets both developed and developing; draw reasonable lessons on how emerging markets can deepen and broaden their domestic markets and increase efficiency. 2.8.2 Bond market development in Asia Murphy, Auster and Dean (2007) note that on July 2, 1997 the Thai baht devalued against the US dollar, the first in a series of collapses that have collectively become known as the Asian financial crisis. The crisis had many causes which highlighted the need to have effectively functioning domestic capital markets. The crisis showed the apparent risk of the absence of diversification with the over-dependence on short maturities, banks an Government Bond Market in Nigeria Government Bond Market in Nigeria CHAPTER 1 Background Finance plays an increasingly important role in economic growth and development of nations around the world. These roles are in many different forms, they include but not limited to channelling savings towards investment. The level of sophistication of a financial system is important and to a large extent determines the overall level of overall growth and development of that economy. The financial system contributes to economic growth performance through several mechanisms and channels à ¢Ã¢â€š ¬Ã¢â‚¬Å" mobilising savings, allocating funds to their most productive uses, monitoring productive uses i.e. investments, transferring and sharing risk (see World Bank (2001)). In modern economies, disruptions in the flow of credit from the financial system to businesses within the economy are detrimental to economic growth and can lead to a general slowdown in the level economic activities. This in turn can lead to unemployment; drop in consumer spending, consumer and industrial economic con fidence levels and ultimately a general slowdown in the economy. Capital account liberalisation in many countries and increasing levels of regional integration and globalisation add an international dimension to the flow of investments and capital around the world. These have made the transfer of funds and investment easy and accessible from one country to another. Investments and capital can be transferred around the world with fewer restrictions as barriers are being removed due to increasing impact of globalization. Since the start of the global financial crisis in 2008, the focus has increasingly been on the roles of the banking sector and the capital market in most economies. The global financial crisis caused a massive flight to safety with investor divesting from currencies, equities markets and other risky assets to the sovereign bond markets which are perceived as safe haven. Investor in major economies divested from perceived risky assets to markets where their investments are relatively safe and guaranteed. This shows one of the significance of sovereign bond market as an investment option for investors in times of crisis and how it can help to minimize the occurrence of such crisis. According to Arteta (2005), there have been many banking crises over the years in many developing countries which were very costly due to the fact that they tend to obstruct the free operations of financial intermediaries, affecting industries and the real economy. Crises can block the normal flow of credit and loans from banks to firms. The dominance of bank intermediation and the general underdevelopment of capital markets (especially the bond markets) in many developing countries aggravate the susceptibility of the real economy to episodes of banking problems. It follows that having additional sources of domestic external finance would allow firms to better withstand episodes of financial distress. By allowing firms to raise funds issuing debt securities, the existence of deep and liquid domestic capital markets would complement the availability of bank finance. By patronising this capital market option, firms would also help to deepen and broaden the market. Well diversified financial systems would lead to more efficient allocation of resources especially capital, where firms can issue bonds in domestic markets. This would enable the firms to ease maturity mismatches in their balance sheets. Thus, bond markets would lessen the effect of waning bank credit flows on firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ financing requests during periods of banking crises. Bond market has major importance in any economy but more so in emerging economy where savings and investment opportunities are inadequate. Financial sector development (more importantly for capital market) begins with the development of a sovereign bond market in many emerging economies. This is common, not only because governments are mostly the biggest domestic borrowers with the best credit ratings but also because of how their actions and inactions affect the overall level of economic development. There have been significant changes politically, economically and socially in many developing economies particularly in Africa. The financial crises of 1997-1998 (in Asia and Russia) have pointed out how vulnerable economies are when over dependent on foreign capital or banking system (Fabella and Madhur, 2003). In many emerging economies in Africa, recently there have been changes in organizational and regulatory framework of capital markets. These countries are re-strategizing in order to broaden their capital market and investors base as well as tap into the new sources of funding such as bond markets. (Brownridge, 1998). Currently, the domestic bond markets in most African economies where they exist are narrow and largely undeveloped compared to the banking system and the equity market. There are many rationales for developing a domestic bond market especially for emerging economies. First, developing a bond market will help the government to finance fiscal deficits which was done previously by forcing local banks to hold government paper, usually to meet demanding reserve and liquidity requirements. Secondly, according to Frankel (1993) in the absence of a bond market it would be difficult to sterilize large long-term capital inflows for infrastructural development. This was a difficult challenge for several central banks during the early 1990s when they had only short-term debt instruments. Sterilization that relies entirely on issuing short-term securities tends to drive up short-term interest rates while bond issuance help to minimise this risk. Thirdly, to generate a yield curve which could serve as a benchmark for investors and borrowers in the financial markets. This enables the market participants to derive the market interest rate that reflect the opportunity cost of fund at each maturity. Also, Sokoler (2002), bond market increases the competitiveness and efficiency of the financial system, which might have been dominated by few banks before the introduction of bond market. However, the effectiveness of the bond market as an alternative source of financing depends essentially on there not being a high co-movement between bank lending, bond and equity financing in a domestic setting, and the absence of contagion in the international capital markets more importantly for countries with open accounts. Bond market debt financing is necessary for developmental projects and infrastructures like electricity generation, transmission and distribution, the fuel energy sector, transportation, telecommunication, etc. 1.2 Purpose of the Study The goal is to provide a detailed review of the progress and prospects for the development of the government bond market in Nigeria with a view to identifying how the market can be broadened and deepened from both the demand and supply sides. The supply side includes the issuers of debt securities like federal government, sub-sovereigns and corporations. The demand side of the market is made up of institutional investors like banks, pension fund administrators, foreign investors, hedge funds and high net worth individuals as well as retail investors. The paper would also examine how the issuers on the supply side can take advantage of the relatively cheap sources of funding in the market against conventional funding methods as well as how the creation of alternative investment options would affect the demand side. Also, the roles and impacts of financial intermediators who facilitate the smooth operations of the market, and the perceived benefits for them (especially primary dealers) would be examined and finally the benefits for the Nigerian economy should the market be further deepened and broaden. Research Method In an attempt to provide an in-depth, objective and balanced perspective on the development of the Nigeria bond market, this project write-up draws conclusions from the various research papers and information supplied by other authors on the development on bond markets in other emerging market economies. The main factors behind the recent development of the Nigerian bond market would be explained in details by analysing information and statistics on the market. This involves the analysis of major macro-economic changes in Nigeria, pension reform, changes in debt management strategies, consolidation exercise in the banking industry etc. Statistical information provided in the dissertation have not been tested and are quoted verbatim. Outline of the Dissertation An outline of the remaining chapters is presented below: Chapter 2 reviews relevant literature on the development of bond markets especially the importance which establishes the foundation of the dissertation. The chapter also considers the main factors, trends and forces that have contributed to the development of bond market in other emerging market countries with an in-depth look at Asian and Russian markets. Chapter 3 takes a detailed look at the timeline of bond market development in Nigeria, structure, regulatory framework, regulators, the main drivers behind the growth of the market as well as the make-up of the demand and supply sides.. Chapter 4 seeks to identify and adapt the lesson in other parts of the world and concludes with the recommendations for broadening and further development of the Nigerian bond market. Chapter 5 will again highlights the importance of the study; it concludes with an overview of the recent developments in the Nigeria bond market and considers the new challenges that would emerge going forward. Chapter Two Literature Review on the development of the bond market. 2.1 Introduction This chapter reviews the literature on domestic bond market development in several emerging economies. From this review critical success factors that are prerequisite to the development of the domestic bond market will be determined. Information has been gathered by reviewing reports from government agencies, investment analystsà ¢Ã¢â€š ¬Ã¢â€ž ¢ reports, reports by the World Bank, the International Monetary Fund, African Development Bank, Asian Development Bank, Bank for International Settlement, the Emerging Markets Committee of the International Organization of Securities Commission and other bond market associations and debt management agencies. 2.2 The Development of bond markets in Emerging Markets This section examines the challenges and issues concerning domestic bond market development in many emerging markets as well as prerequisites for an efficient, broad and deep domestic bond market. There are several factors to consider. First, the financial crisis that happened between 1997-1998 reminded most policy makers around the world of the over-reliance of many emerging market economies on their respective domestic banking systems as a source of funding. Secondly, information on bond markets in emerging markets especially in sub-Saharan Africa is not readily available when compared to other developed markets or even other domestic market segments notably the equity market. 2.3 Rationale for developing a domestic bond market After the Asian and Russian financial crises of 1997-1998 many researchers have advocated for the development of domestic bond market as an alternative source of financing not only in the crisis-hit countries but for all emerging market economies where obvious shortcomings are prevalent. The following is a summary of the major arguments put forward: an alternative source of domestic debt finance fiscal deficit financing broadening and deepening of capital markets efficient risks pricing aids smooth operation of monetary policy etc. 2.3.1 An alternative source of domestic debt finance Witherell (2003) argued that bond markets reduce the over-dependence on bank credit for debt financing and that these markets also reduce the susceptibility of the economy to the risk of banking system failure. Banking crisis can have negative and adverse effects on the economy as a whole because firms and industries would find themselves credit constrained and be forced to jettison new investment spending, leading to a drop in aggregate demand through the multiplier effect. Harewood (2000) also opined that deep and efficient bond market enable firms to gain access to an alternative source of debt financing which could help banks in times of crisis to recapitalise through securitization by issuing bonds backed by non-performing loans. 2.3.2 Fiscal deficit financing Khalid (2007) argued that the benefits of developing domestic bond markets are both macroeconomic and microeconomic in nature. Within the macroeconomic perspective, the primary importance of the government bond market is to provide a channel for the financing of fiscal deficits. This is arguably the most important benefit for emerging market economies with historically large fiscal deficits and the failure of other possible sources of financing the fiscal deficits which are compelling governments to borrow from domestic markets. In addition, several countries both developed and developing have faced the need to finance very large extraordinary and unusual expenditure which are of long-term nature. The finance required for bank restructuring and long-term support for industries have been one recent example in many emerging markets. 2.3.3 Lower cost of borrowing IOSCO (2002) identified that governments and firms can enjoy lower cost of debt capital in the bank markets compared to high charges and rates offered on bank loans. This is achieved through the process of bank disintermediation which allows direct access to investors, thus removing the à ¢Ã¢â€š ¬Ã…“middlemanà ¢Ã¢â€š ¬? and related costs. Also, the issuer may tailor its asset and liability profile to minimise the risk of currency and maturity mismatch thus reducing the weighted cost of capital. 2.3.4 Broadening the capital market Debt market development helps to diversify the capital markets, reducing over-dependence on banks and susceptibility within the banking system which is positive for the entire economy at large. The bond market has provided avenues for financial engineering and innovations which have broaden the financial system in general (Akhtar 2007). A well-functioning bond market provides with investment options across a wider range of instruments including sovereign, sub-sovereign, corporate bonds and securitized obligations such as mortgage backed securities and collaterized debt obligations. The wide range of investment alternatives allows investors to make optimal asset allocation decisions. This is particularly important for investor like life insurance companies and pension fund administrators because the bond market facilitates better management of the maturity structure of their balance sheets. 2.3.5 Efficient pricing of credit risks Bond markets create cost-effective and competitive capital markets by generating market yield and interest rates that reflect the opportunity cost of capital at each tenor and maturity. This is necessary for efficient and financing decisions. Herring and Chatusripitak (2000) further stated that without a developed bond market, firms and investors would lack a clear measure of opportunity cost of funds. This may lead to mispricing of funds as was evident in late 1990s in many dynamic Asian economies suggesting that the internal discount rate may have often been too low because returns on investment fell sharply. IOSCO (2002) suggests banksà ¢Ã¢â€š ¬Ã¢â€ž ¢ interest rates are not always competitively determined so may not always reflect the true opportunity cost of funds. This is because big banks could always agree to fix rates. 2.3.6 Aids smooth operation of monetary policy The debt market is increasingly more important for the operation of monetary policy. Monetary policy now relies not only on a well functioning money market but also increasingly on indirect instruments of control like the bond market. Moreover, yields in the long-term bond market show expectations of likely macroeconomic developments and about market reactions to monetary policy moves by market regulators. 2.3.7 Promotion of financial stability The bond market provides an alternative source of funding to equity and banking financing, this alternative source enhances the stability of the financial market as a whole and efficient allocation of credit. This was evident after the Asian financial crisis the weak banking sector provided an impetus to the development of bond markets in several emerging markets. By diversifying funding sources, firms can adjust their borrowing between the banks and the debt markets (Hameed, 2007). IOSCO (2002) added that where there is no corporate bond market, a significant ratio of debt funding for corporations would come from the banking sector. By doing this, banks would assume a considerable amount of risk mainly due to the maturity mismatch between liquid short-term liabilities (deposits) and relatively long-term assets (loans). Banks cannot transfer credit risk to depositors. Herring and Chatusripitak (2000) concluded that in emerging markets where few banks dominate and account for bulk of lending activity, there is a concentration of credit risk with the banking sector. This leads to an increasing level of systemic risk in an economy. In summary, the existence of a well-functioning bond market ensures that risks are efficiently diversified within the financial system. 2.3.8 Sterilization of large capital inflows Frankel (1993), for any economy to grow and develop there is a need to sterilise large capital inflows. This was a particularly difficult challenge and difficult for several central banks in emerging economies during the first half of the 1990s. In the absence of well developed bond markets, the central bank has only short-term debt instruments at its disposal in conducting open market operations and raise fund for governments to finance developmental projects. Sterilisation that relies exclusively on issuing paper tends to drive up short-term interest rate and crowding-out effect. This risks biasing the structure of inflows towards the short end. Sterilisation through the sale of bonds reduces such risk. 2.4 Basic prerequisites for successful development of government debt markets The development of bond markets must be seen as a continuous, progressive and dynamic process in which macroeconomic and political stability are necessary to building an efficient market. Also, the credibility of the government as an issuer of debt securities must be established. World Bank (2001) noted that à ¢Ã¢â€š ¬Ã…“the prerequisites for establishing an efficient and deep government domestic currency debt market include a credible and stable government, sound fiscal and monetary policies, effective legal, tax and regulatory infrastructure, smooth and secure settlement arrangements, and a liberalised financial system with competing intermediaries. Where these basics are lacking or very weak, priority should be given to adopting and implementing stable and credible macroeconomic policy framework, reforming and liberalising in different areasà ¢Ã¢â€š ¬?. All these factors point to the creation of an enabling environment. Domestic as well as foreign investors will be unwilling to purchase government securities, especially medium- and long-term instruments when there are expectations of high inflation, large devaluations, or high risks of default like Greece recently. It is important that governments work toward macroeconomic policy framework that promotes credible commitment to prudent and sustainable fiscal policies and stable monetary conditions. Such actions will cut government funding costs over the medium to long term, as the risk premium embedded in rates and yields on government securities drop. Inflationary expectations will have impact on longer-term nominal government securities yields and affect not only government borrowing costs, but also, in countries with unstable monetary and fiscal environment, the governmentà ¢Ã¢â€š ¬Ã¢â€ž ¢s ability to extend the yield curve beyond very short maturities. Thus a credible commitment from government to contain inflation is crucial for government securities market development. The ability to attract foreign investors to a countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s debt market is to a large extent determined by the exchange rate and capital account policies of the country. Foreign investors have a major role to play in the development of government debt markets and in hastening development of the necessary infrastructure by injecting new competition into otherwise dull markets. Foreign investors will compare the yield on domestic debt with those of international markets. They will consider the default risk and the risk of exchange rate volatility. Exchange rate, capital account policies when combined with monetary and fiscal policies can affect each of these risks, and inappropriate policies can result in increased interest rate and exchange rate volatility. Such volatility impedes development of government securities issues with long maturities and can harm secondary market liquidity when there are no derivatives or complementary markets that investors can use to hedge ag ainst the risk of price movements. The soundness of the banking system also has important implications for development of the government debt market. Investor concerns about the health and soundness of the banking system will negatively affect the ability of the government to roll over or issue new debt. Furthermore, lack of financially healthy intermediaries will cause secondary market illiquidity and inefficiency. A banking system in crisis will further impede development of a government debt market and cause significant liquidity shortages. This is because important associated markets such as those for interbank and repurchase agreement transactions are unlikely to function properly. Although the challenges involved in providing the necessary macroeconomic and financial framework are enormous, these should not deter authorities. This is because the potential benefits to the government and the economy are considerable. In its role as both regulator and primary issuer, the government is a central player in the debt market. The central bank, in implementing monetary policy, will also influence market structure and inevitably market development. Given the involvement of several government agencies and entities in the process of market development, they should interact with the private sector and other market participants as this may be a useful tool to spearhead market development efforts. Harwood (2000) adds that à ¢Ã¢â€š ¬Ã…“Market participants need to evaluate the critical success factors to determine which ones constrain their marketà ¢Ã¢â€š ¬Ã¢â€ž ¢s growth and how to deal with them. Market development will be accelerated if regulators who are interested in market development work closely with market participants to identify problems and solutions with other regulators to persuade them to address problems and solutions and with other regulators to persuade them to address problems under their control.à ¢Ã¢â€š ¬? Although, there is no one size fits all framework to build a market, emerging markets should try to learn from one anotherà ¢Ã¢â€š ¬Ã¢â€ž ¢s experiences for guidance on how to develop from à ¢Ã¢â€š ¬Ã…“emergingà ¢Ã¢â€š ¬? to à ¢Ã¢â€š ¬Ã…“emergedà ¢Ã¢â€š ¬? and on what works best in what type of environment. Harwood (2000) concludes that participation in the market cannot be forced, but it can be encouraged by an enabling environment. It can also be discouraged by à ¢Ã¢â€š ¬Ã…“unablingà ¢Ã¢â€š ¬? environment. 2.5 Government securities issuance strategy and market access The process of debt issuance is an important factor in debt market development. For the market to develop, transparency and credibility of the process must be built although they take time. A market-oriented government funding strategy is an essential foundation for the growth and development of a debt market. The strategy involves the adherence to basic market principles of broad market access and transparency, a commitment to finance budget deficits through the market, and a proactive and continuous approach in developing the necessary regulatory framework to support market development. World Bank (2001,a), à ¢Ã¢â€š ¬Ã…“governments need to improve market access and transparency by providing high-quality information about debt structure, funding needs and debt management strategies to market participants and public at large. They must solicit investorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ views on the current strategy and plans for change. In this way, the government will better understand the source of demand for its instruments and have the ability to act to remove barriers obstructing investment in them.à ¢Ã¢â€š ¬? World Bank (2001,b) further states that à ¢Ã¢â€š ¬Ã…“a sound and prudent debt management operation is also central to the governmentà ¢Ã¢â€š ¬Ã¢â€ž ¢s credibility as an issuerà ¢Ã¢â€š ¬?. Having clear debt management objectives, proper coordination between debt management objectives, prudent risk management and effective institutional frameworks are essential components of sound debt management. As part of developing and maintaining a well-functioning government securities market, authorities will have to provide clear and timely information about the structure and nature of fiscal deficits and public debt as well as other Treasury operations. The information also include but not limited to amortization schedule, issuing calendar, description of outstanding securities, schedule for buybacks or re-openings where relevant, and Treasury cash balances. 2.6 Government securities instruments and yield curve One of the essential benefits of a well-functioning government securities market is to develop a set of benchmark securities. By concentrating new issues of government securities in a relatively limited number of popular, standard maturities, governments can reduce their issuing cost and boost liquidity in those maturities. Markets, in turn, can use those liquid issues as convenient benchmarks for the pricing of a range of other financial instruments. In addition, spreading the relatively few benchmark issues across a fairly wide range of maturities and tenors is generally regarded as building a à ¢Ã¢â€š ¬Ã…“benchmark yield curveà ¢Ã¢â€š ¬?. This can help to facilitate more accurate market pricing of financial instruments across a similar maturity spectrum. 2.7 Investor base for government securities Governments in many emerging market relied on captive sources of funding whereby financial institutions are required to purchase and hold government securities, often at below-market interest rates. However, this system of raising funds is fast diminishing in many of these countries. Instead, countries are developing a diversified investor base for their government securities. Investors in developed government debt market can range from small-scale retail investor to and foreign institutional investors. A diversified investor base for debt securities is necessary to high liquidity, stable demand and reasonable spread in the market. A heterogeneous investor base with different background, time horizons, expectations, risk preferences, and trading motives ensures active trading, creating high liquidity. 2.7.1 Commercial and Investment Banks Commercial and investment banks serve as both sales agentsà ¢Ã¢â€š ¬Ã¢â€ž ¢ usually primary dealers and investors in government securities in many developing economies. Banks provide valuable source of demand and liquidity for government securities market by providing two-way quotes for other investors 2.7.2 Contractual savings sector This group consist of life insurance companies and pension fund administrators contractual. This sector is a major player in the fixed income securities markets, as it provides a stable source of long-term demand. This is because of the long-term nature of funds that the sector controls. The sectorà ¢Ã¢â€š ¬Ã¢â€ž ¢s demand for fixed-interest, low-credit-risk products also provides an important basis on which to develop standardized, securitized products such as mortgage bonds. Pension funds and life insurance companies are usually required to invest a large portion of their assets in so-called gilt-edged assets. This has helped to make this sector prominent in the government securities market. 2.7.3 Collective investment funds Collective investment funds, such as mutual and hedge funds, unit trust scheme etc can play an important role in the development of the government securities market, especially the shorter-term segments of the market because of the nature of funds that they manage. They offer retail and other investor alternative investment option other than investing in bank products. This helps to induce more competition in this part of the financial sector, and can be a cost-effective way for the government to reach retail investors. These collective investment funds that are established domestically or offshore help to deepen the securities market and should be allowed participate actively in the market.. 2.7.4 Retail investors Retail investors are a source of stable demand to the government securities market which could be crucial in times of high volatility. Demand from retail investors can help to cushion the impact of sales by institutional and foreign investors. In order to develop a diversified investor base for government securities the needs of retail investors should be incorporated into the overall strategy of market development. 2.7.5 Foreign investors Foreign investors are important source of demand and innovation to national capital markets, including government securities markets. They have received much attention in both mature markets and developing countries because of issues like regulation, capital flight, entry and exit barriers, etc. They have contributed positively to the development of government securities market in several countries through the positive pressure they place on the quality and services of intermediaries and their emphasis on sound, safe and robust market infrastructure. Foreign investors could be in many forms like emerging markets funds, such as some hedge funds and other specialized closed and open-end country or emerging-market funds. They also include crossover investors, such as pension funds and insurance companies not as dedicated to investing in a particular region or even country, and other more specialized investors like distressed asset funds, private capital fund etc. 2.8 Other bond markets 2.8.1 Introduction Various studies have been carried on bond market development in different parts of the world. For example Batten and Fetherston (2003) for Asian economies, Sylla (2001), World Bank and International Monetary Fund (2001), etc. BIS (2002) also reviews the experience of many emerging economies in the development of debt markets. The review shows to varying degrees the three main factors that delayed the development of bond market in most emerging economies namely: a bank-centered financial system, opaque corporate governance and borrowing in low interest rate currencies. This section will look at the experience of other bond markets both developed and developing; draw reasonable lessons on how emerging markets can deepen and broaden their domestic markets and increase efficiency. 2.8.2 Bond market development in Asia Murphy, Auster and Dean (2007) note that on July 2, 1997 the Thai baht devalued against the US dollar, the first in a series of collapses that have collectively become known as the Asian financial crisis. The crisis had many causes which highlighted the need to have effectively functioning domestic capital markets. The crisis showed the apparent risk of the absence of diversification with the over-dependence on short maturities, banks an