How Do Political Factors Shape the Bank Risk-Sovereign Risk Nexus in Emerging Markets?

Stefan Eichler

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: This paper studies the role of conditioning political factors for determining the impact of banking crises on sovereign bond yield spreads for a sample of 33 emerging economies in the period 1995-2010. Accounting for the endogenous nature of banking crisis outbreaks, I find that sovereign bond yield spreads increase, on average, by 13 to 17 percentage points during banking crisis episodes. I find that the adverse impact of banking crises on sovereign solvency is less pronounced (or even insignificant) for countries run by powerful and effective governments, low levels of public debt, and a high degree of political stability.

JEL-codes: G01 G12 G21 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/112877/1/VfS_2015_pid_165.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:112877

Access Statistics for this paper

More papers in VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().