Sovereign credit rating: Evidence of bias against poor countries

David Tennant, Marlon R. Tracey and Damien W. King

The North American Journal of Economics and Finance, 2020, vol. 51, issue C

Abstract: We assess whether credit rating agencies limit poor countries’ sovereign credit ratings. Consistent with prior studies, our heterogeneous middle-inflated ordered probit model indicates a statistical bias stacked against poor countries whenever their fundamentals change. This is important, as second-generation crisis models suggest that such biases can have self-fulfilling consequences.

Keywords: Credit rating agencies; Sovereign debt; Developing countries (search for similar items in EconPapers)
JEL-codes: F33 G15 G24 O16 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:51:y:2020:i:c:s1062940818302158

DOI: 10.1016/j.najef.2018.11.006

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