Sovereign Credit Ratings in Developing Economies: New Empirical Assessment

2016 ◽  
Vol 21 (4) ◽  
pp. 382-397 ◽  
Author(s):  
Gabriel Caldas Montes ◽  
Diego S. P. de Oliveira ◽  
Helder Ferreira de Mendonça
Keyword(s):  
Developing Economies ◽  
Credit Ratings ◽  
Empirical Assessment ◽  
Sovereign Credit ◽  
Sovereign Credit Ratings

scholarly journals An analysis of Granger causality between sovereign credit rating and economic growth in Sub-Saharan Africa

2020 ◽  
Vol 17 (4) ◽  
pp. 85-93
Author(s):  
Misheck Mutize ◽  
Virimai V. Mugobo
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Foreign Currency ◽  
Credit Rating ◽  
Developing Economies ◽  
Credit Ratings ◽  
Sub Saharan Africa ◽  
Sovereign Credit ◽  
Sovereign Credit Ratings ◽  
Sub Saharan

Interest in the relationship between credit rating and economic growth is growing as emerging economies increasingly integrate into international financial markets. Without credit ratings, developing economies would not have been able to successfully issue their sovereign bonds to support economic growth. Therefore, this paper examines a causality relationship between Standard & Poor’s long-term foreign currency sovereign credit ratings and economic growth in 19 Sub-Saharan countries over the period from 2003 to 2018. The results of the Granger causality tests show a unidirectional causality from sovereign credit ratings to economic growth, not vice versa. This implies that economic growth is not significant in determining sovereign credit ratings. It can thus be concluded from these findings that sovereign credit ratings are proactive actions by rating agencies that are relevant in determining future economic growth. Thus, investors benefit from utilizing credit ratings to prevent inherent information asymmetry in fundamental economic factors. Therefore, it is important for policy makers to pay attention to sovereign credit ratings when formulating macroeconomic policies.

scholarly journals The Nonlinear Relationship Between Public Debt and Sovereign Credit Ratings

2019 ◽  
Vol 19 (162) ◽  
Author(s):  
Metodij Hadzi-Vaskov ◽  
Luca Ricci
Keyword(s):  
Public Debt ◽  
Credit Rating ◽  
Developing Economies ◽  
Credit Ratings ◽  
Analytical Techniques ◽  
Nonlinear Relationship ◽  
Sovereign Credit ◽  
Sovereign Credit Ratings ◽  
Advanced Economies ◽  
Rating Category

This study investigates the nonlinear relationship between public debt and sovereign credit ratings, using a wide sample of over one hundred advanced, emerging, and developing economies. It finds that: i) higher public debt lowers the probability of being placed in a higher rating category; ii) the negative debt-ratings relationship is nonlinear and depends on the rating grade itself; and iii) the identified nonlinearity explains the differential impact of debt on ratings in advanced economies versus in emerging markets and developing economies. These results hold for both gross debt and net debt, and are robust to alternative dependent variable definitions, analytical techniques, and empirical specifications. These findings underscore the potential for fiscal consolidation in helping countries achieve a better credit rating.

Sovereign credit ratings and bank funding cost: Evidence from Africa

2017 ◽  
Vol 42 ◽  
pp. 887-899 ◽  
Author(s):  
Mary Opoku Mensah ◽  
Elikplimi Komla Agbloyor ◽  
Simon Kwadzogah Harvey ◽  
Vera Ogeh Fiador
Keyword(s):  
Credit Ratings ◽  
Sovereign Credit ◽  
Sovereign Credit Ratings ◽  
Bank Funding ◽  
Funding Cost
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