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ID: 158683

Financial data transparency, international institutions, and sovereign borrowing costs / Copelovitch, Mark ; Hallerberg, Mark ; Gandrud, Christopher

Hallerberg, Mark	Journal Article
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Summary/Abstract

Recent events in international finance illustrate the close connection between the viability of a country's major private financial institutions and the sustainability of its sovereign debt. We explore the precise nature of this connection and the ways in which it shapes investors’ expectations of sovereign creditworthiness. We consider how investors use the overall level of information available about the private financial sector—and the potential risks it poses to government finances—when making decisions about investing in sovereign debt. We expect that governments providing more information about the private financial sector will have lower, and less volatile, borrowing costs. In order to test this argument, we create a new Financial Data Transparency (FDT) Index measuring governments’ willingness to release credible financial system data. Using the FDT and a sample of high-income OECD countries, we find that such transparency reduces sovereign borrowing costs. The effects are conditional on the level of public indebtedness. Transparent countries with low debt enjoy lower and less volatile borrowing costs.

Key Words

International Institutions ; Financial Data Transparency ; Sovereign Borrowing Costs

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ID: 053135

Remodeling the competition for capital: how domestic politics e / Basinger, Scott J; Hallerberg, Mark

Mar 2004

Basinger, Scott J	Journal Article
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Mar 2004.

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Domestic Politics

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