ADB: Developed capital markets enhance financial stability in Azerbaijan
BAKU, Azerbaijan, Sept. 25
By Zeyni Jafarov – Trend:
There is a need to develop a deep and efficient local capital market in Azerbaijan, the Asian Development Bank (ADB) told Trend.
“A well-functioning capital market can help mobilize and allocate long-term local currency financing in more sustainable ways and with less macroeconomic risk, thereby contributing to a country’s economic growth and poverty reduction,” ADB said.
“Liquid capital markets in local currency also diversify funding sources, enhance financial stability, and support the banking system’s maturity transformation functions,” ADB said. “Market infrastructure, such as an exchange system, depository system, valuation system, registration system, clearing system, and primary dealer system, is needed to facilitate the smooth operation of the market.”
“We know that local financial institutions and private companies use the local currency bond markets only to a very limited extent to raise capital,” ADB said. “This is mainly due to lack of recognition of benefits and available capital market products; limited experience in communicating with investors; and weak corporate governance integrating best-practice accounting reporting and auditing standards to comply with the disclosure requirements.
“The need for a well-sequenced and coordinated local capital market development implementation strategy is fundamental,” ADB said. “Azerbaijan will create the necessary ecosystem for effective capital market transactions.”