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Are working remittances relevant for credit rating agencies

Rolando Avendano (), Norbert Gaillard () and Sebastián Nieto Parra
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Sebastián Nieto Parra: OECD - Economics Department - OCDE - Organisation de Coopération et de Développement Economiques

Authors registered in the RePEc Author Service: Sebastián Nieto-Parra ()

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Abstract: This paper studies the impact of workers' remittances on sovereign ratings in 55 developing countries over the period 1993–2006. First, it looks at the determinants of sovereign ratings, including remittance flows. Second, it builds an empirical model for remittance-dependent countries to capture the effect of remittances, through a reduction of debt vulnerability and volatility of external flows, on Fitch, Moody's and S&P ratings. Third, it assigns ratings to unrated Latin American and Caribbean countries for which remittance flows are high. Our results suggest that there is no single model to rate countries and the impact of remittances on ratings is enhanced for small, low and middle income economies.

Keywords: Remittances; Sovereign ratings; Emerging markets; Sovereign risk (search for similar items in EconPapers)
Date: 2011-03
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Published in Review of Development Finance, 2011, 1 (1), pp.57-78. ⟨10.1016/j.rdf.2010.10.003⟩

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Working Paper: Are working remittances relevant for credit rating agencies? (2011)
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DOI: 10.1016/j.rdf.2010.10.003

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