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Determinants of sovereign credit ratings in emerging markets.

Osobajo, Oluyomi A.; Akintunde, Adeola E.

Authors

Oluyomi A. Osobajo

Adeola E. Akintunde



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.

Journal Article Type Article
Publication Date May 31, 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
Institution 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
DOI https://doi.org/10.5539/ibr.v12n5p142
Keywords Sovereign credit rating; Credit rating; Credit rating agency; Emerging market

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