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| Srl | Item |
| 1 |
ID:
191014
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| Summary/Abstract |
Since the 1990s, credit rating agencies have played a prominent financial role in developing countries, rating their sovereign bonds and determining capital costs. Over much the same years, domestic terrorism has expanded, increasing market disruptions in countries. Despite the heightened costs related to rebel attacks, few studies investigate the impact of domestic terrorism on bond ratings. Using a sample of seventy-one developing countries between 1996 and 2018, we find that domestic terrorist incidents result in sovereign bond downgrades for countries that receive ratings. Further, when we disaggregate terrorist events by target type, we observe that attacks directed at the government, military and police, business, non-governmental organizations, and private citizens/property have a larger effect than other terrorist incidents. We argue that specific domestic terrorist attacks increase economic instability, leading to capital flight, and a shifting of resources from productive economic sectors to counterterrorism. The resulting economic changes weaken a country’s economy and increase debt nonpayment risk.
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| 2 |
ID:
103534
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| Publication |
2011.
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| Summary/Abstract |
The Financial Crisis in the late 1990s and the ongoing crisis have showed the importance of creating an early warning system (EWS) to lessen economic, political, and foreign policy fallout. Surprisingly, the EWS literature rarely considers the role of political institutions to detect economic dangers that can be harbingers of conflict. Controlling for common explanations in the literature, we use panel data for fifty developing countries from 1987 to 2004 to investigate the effect of political determinants for predicting economic crises. Although most political variables appear to have little influence in forecasting defaults or currency crises, models specified with bond ratings from the credit rating agencies can be helpful for predicting the onset of crisis. Our research is a first step toward gaining insights into how best to anticipate crisis that may prove beneficial particularly in light of the current global crisis.
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| 3 |
ID:
077455
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| Publication |
2007.
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| Summary/Abstract |
The importance of sovereign bond ratings has grown recently as assessments by credit rating agencies (CRAs) influence the cost of capital. Understanding how CRAs determine country ratings is difficult based on the secretive nature of these agencies. Controlling for the common explanations in the literature, we use panel data and interviews to investigate the role of the "democratic advantage" and other determinants on bond ratings set by Moody's Investor Services, Standard and Poor's, and Fitch Ratings for fifty developing countries from 1987 to 2003. We find that regime type and most other political factors have little effect on bond raters. Instead, trade, inflation, growth, and bond default strongly affect sovereign ratings. The message for policymakers in developing countries is that factors that support bond repayment are most useful for enhancing CRA ratings
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