This paper characterizes the expansion of financial markets in East Asia during the two decades following the 1997-98 Asian Financial Crisis. Financial markets in the region have developed significantly and have become large by international standards. Firms have actively participated in this process. Issuance activity in equity, bond, and syndicated loan markets by many firms has grown considerably, particularly in domestic markets. Smaller firms have gained access to these markets over time. However, only large corporations have issued equity, bonds, and syndicate loans. Acknowledging the obstacles for smaller firms to obtain financing, policy makers have established new markets and instruments aimed at SMEs. The experience of the relatively large SME capital markets in the region suggests that, though they are better suited at financing new sectors and private sector firms, they still serve fairly large corporations. Banks and other financial intermediaries, aided by new technologies, seem necessary for a fuller financial sector development.
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