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Sovereign Credit Ratings in Developing Economies: New Empirical Assessment
Author(s) -
Montes Gabriel Caldas,
Oliveira Diego S. P.,
Mendonça Helder Ferreira
Publication year - 2016
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.1551
Subject(s) - openness to experience , economics , inflation (cosmology) , sovereignty , language change , corporate governance , order (exchange) , democracy , developing country , panel data , sovereign credit , monetary economics , macroeconomics , financial system , international economics , credit risk , finance , political science , economic growth , law , econometrics , credit default swap , politics , psychology , social psychology , art , physics , literature , theoretical physics
This study contributes to understanding the main determinants of sovereign ratings for developing countries making use of information from Standard & Poor's, Moody's, and Fitch. Based on a sample of 40 countries for the period 1994 to 2013 and panel data approach, we extended previous works in the literature by including new economic aspects, as well as, new institutional and governance variables (e.g. inflation targeting, financial openness, democracy, corruption, etc.). The findings denote that, besides the traditional macroeconomic variables, adoption of inflation targeting, financial openness, democracy, law and order, and less corruption are important to improve the sovereign ratings. Copyright © 2016 John Wiley & Sons, Ltd.