Determinants of sovereign credit ratings in emerging markets.

Osobajo, Oluyomi A.; Akintunde, Adeola E.

Abstract

This study critically investigates the determinants of sovereign credit ratings in emerging markets, during 2001 to 2015. This was conducted in 20 emerging markets, using S&P and Moody ratings. Linear framework econometric approach with the use of pooled Ordinary Least Square regression method was adopted in the study. The explanatory power of the estimated models has a good performance across both rating agencies. The study reveals the importance of five macroeconomic variables in determining the sovereign credit rating of emerging markets. These variables are: gross domestic product per capital, inflation, government debt, reserves, and external debt. Also, world governance indicators, a proxy for qualitative/political variables, were found to be an essential determinant of rating.

Citation

OSOBAJO, O.A. and AKINTUNDE, A.E. 2019. Determinants of sovereign credit ratings in emerging markets. International business research [online], 12(5), pages 142-166. Available from: https://doi.org/10.5539/ibr.v12n5p142

• Journal Article Type: Article
• Acceptance Date: Apr 18, 2019
• Online Publication Date: Apr 26, 2019
• Publication Date: May 31, 2019
• Deposit Date: Sep 12, 2019
• Publicly Available Date: Sep 12, 2019
• Journal: International Business Research
• Print ISSN: 1913-9004
• Electronic ISSN: 1913-9012
• Publisher: Canadian Center of Science and Education
• Peer Reviewed: Peer Reviewed
• Volume: 12
• Issue: 5
• Pages: 142-166
• DOI: https://doi.org/10.5539/ibr.v12n5p142
• Keywords: Sovereign credit rating; Credit rating; Credit rating agency; Emerging market
• Public URL: https://rgu-repository.worktribe.com/output/545501