The Politics of Sovereign Credit Spreads

Houcem Smaoui, Narjess Boubakri and Jean-Claude Cosset

Emerging Markets Finance and Trade, 2017, vol. 53, issue 8, 1894-1922

Abstract: Using a large sample of 35 developing countries for the period 1993–2009, we provide strong and robust evidence that the political institutions in place play a significant role in explaining sovereign spreads. In particular, we find that unconstrained presidential systems increase spreads, while political stability and higher competition for political contest decrease spreads. In addition, political cohesion (political fragmentation) depresses (increases) spreads. Instead, the latter are insignificantly related to political orientation.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:53:y:2017:i:8:p:1894-1922

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DOI: 10.1080/1540496X.2016.1201760

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