Sovereign risk ratings: Biased toward developed countries?

Derya Gültekin-Karakaş; Mehtap Hisarciklilar; Hüseyin Öztürk

doi:10.2753/REE1540-496X4703S204

Sovereign risk ratings: Biased toward developed countries?

Derya Gültekin-Karakaş, Mehtap Hisarciklilar, Hüseyin Öztürk

Research output: Contribution to journal › Article › peer-review

47 Citations (Scopus)

731 Downloads (Pure)

Abstract

Sovereign credit ratings are widely used measurements for "country risk" in international capital markets. However, they have been exposed to increasing criticism in the aftermath of the recent global financial crises. Many international authorities proposed new frameworks for the regulation and supervision of the credit rating sector, in which many countries have taken various steps in this respect. Yet the reliability of sovereign credit ratings has not been criticized in the literature. Using random effects ordered probit modeling, this study explores the reliability of credit ratings. Separate analyses of developed and developing countries suggest that the consistency of credit ratings differs by favoring the developed country group.

Original language	English
Pages (from-to)	69-87
Number of pages	19
Journal	Emerging Markets Finance and Trade
Volume	47
Issue number	SUPPL. 2
DOIs	https://doi.org/10.2753/REE1540-496X4703S204
Publication status	Published - 1 May 2011
Externally published	Yes

Bibliographical note

This is an Accepted Manuscript of an article published by Taylor & Francis in Emerging Markets Finance and Trade on 01/05/2011, available online: http://www.tandfonline.com/10.2753/REE1540-496X4703S204

Funding

Derya Gültekin-Karakas* ([email protected]) is an assistant professor at the Faculty of Management, Istanbul Technical University. Mehtap Hisarcıklılar ([email protected]) is an assistant professor at the Faculty of Management, Istanbul Technical University. Hüseyin Öztürk (huseyin. [email protected]), the corresponding author, is an expert in the International Capital Markets Department, General Directorate of Foreign Economic Relations, Undersecretariat of Treasury, Republic of Turkey. The opinions expressed in this paper are those of the authors and do not necessarily reflect the opinions of the Undersecretariat of Turkish Treasury. A preliminary version of the paper was presented at EuroConference 2010 of the Society for the Study of Emerging Markets, Milas, Turkey, July 16–18, 2010, and at Eurasia Business and Economics Society 2010 Conference, Istanbul, Turkey, May 26–28, 2010. The authors thank the participants in the conferences.

Keywords

Credit-rating agencies
ordered logit
ordered probit
political risk
risk premium
sovereign rating

ASJC Scopus subject areas

Economics, Econometrics and Finance(all)
Finance

Access to Document

10.2753/REE1540-496X4703S204

Post-PrintAccepted author manuscript, 627 KBLicence: CC BY

Cite this

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Sovereign risk ratings: Biased toward developed countries?

Abstract

Bibliographical note

Funding

Keywords

ASJC Scopus subject areas

Access to Document

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