Twelfth Global Studies Conference

Abstract

The capital requirements regulation of the financial markets post 2008 crisis has forced many banks and corporate bond dealers out of the market-making. That role has migrated to the largest long-term holders holders of corporate debt, the asset managers like Blackrock and Vanguard. At the same time, the U.S and European governments have force more pricing transparency. The corporate bond markets have become much thinner but the bid-ask spreads have not increased. This has opened the market up to individual investors who can now directly invest in corporate securities at the same prices as large institutions. Paradoxically, the crisis, instead of concentrating power, distributed it more democratically. This is good news as Europe moved more toward bond financing away from banking, the U.S. almost completely shifted to bonds. The total fixed income markets is now around $90 trillion. My three related studies discuss this evolution from the perspective of a humble individual investor faced with new better opportunities.