Determinants of Sovereign Credit Ratings in Emerging Markets

Oluyomi A. Osobajo and Adeola E. Akintunde

International Business Research, 2019, vol. 12, issue 5, 142-166

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.

Keywords: sovereign credit rating; credit rating; credit rating agency; emerging market (search for similar items in EconPapers)
JEL-codes: C33 F31 F41 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ibn:ibrjnl:v:12:y:2019:i:5:p:142-166

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