This paper explores the factors associated with the development of corporate debt markets using panel data covering 30 countries from 1989 to 2002. The results support Rajan and Zingales's (2003) "interest group" theory of financial development that banks appear to oppose corporate debt market development as a potential force for their own disintermediation. The more concentrated the banking sector, the smaller the corporate bond market relative to the size of the economy. There is also evidence that the opening up of cross-border merger and acquisition activities and the presence of global corporations seem to weaken the influence of domestic banks. While outward-looking economic policies can reduce the power of domestic banks, the major countervailing force appears to be that committed governments recognizing corporate debt markets can enhance the resilience of their domestic economies.