Are sovereign credit ratings impacted by institutional quality
Abhinav Goel & Archana Singh
What the paper says
Sovereign credit ratings (SCR) depict the risk taken by investors, influencing the availability and cost of international funding. Methodologies of international credit rating agencies reveal that both qualitative and quantitative factors are important in determining SCR. While the role of quantitative factors in determining SCR has been extensively analysed, the study of the role of qualitative factors is limited. While there could be various qualitative factors impacting SCR, the present work focuses on one institutional factor – 'rule of law'. To investigate the linkage, the present work develops a dataset having this qualitative parameter of 60 countries for five years (2016–2020). The data has been gathered from World Bank and Moody's Investors Services and studied using regression analysis which indicates a positive correlation of 82% between 'rule of law', and SCR. Hence, SCR, and therefore cost and availability of international funds, can be improved by strengthening the 'rule of law'.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.00 × 0.4 = 0.00 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.