An Empiric Study on the Efficiency of Internet Bond Auction in Korea

초록

This study aims to analyze the efficiency of the electronic bond issue in Korea, by focusing mainly on the government agency bonds. The efficiency is defined as a lower financing cost and advantage of technologies offered by Web. This comparative study was performed by describing the characteristics of the electronic bond auction, and by analyzing empirically off-line and on-line bond issues with its stop yields and commissions using the data of the Korean government agency bonds. In off-line primary market auctions using fax or telephone, unfairness and opaqueness is believed to exist due to asymmetric information among issuers, investors, and brokerage houses. On the other hand, the introduction of an electronic bond auction system is expected to relieve the problems in the off-line bond issue and enhance transparency and fairness in the primary bond market. This is primarily because of the fair openness of information to the internet users as proved before. I also verified the hypothesis that an increase in participants can lower interest in online auctions compared to off-line auctions.

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