Measuring the Effect of Corruption on Sovereign Bond Ratings
AbstractInstrumenting for sovereign corruption, we find that Transparency International's Corruption Perceptions Index which 'ranges from 10 (highly clean) to 0 (highly corrupt)', is a significant predictor of the Standard and Poor's sovereign bond ratings ranging from 1 (Sovereign Default) to 22 (AAA) in panel data from 52 countries from 1993 to 2002. Corruption downgrades the creditworthiness of sovereign bonds by diverting loan proceeds from productive projects to less productive ones, if not to offshore accounts. In particular, a one point worsening of the corruption perception index leads to an estimated one-notch reduction out of 22 in the sovereign bond rating.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.
Volume (Year): 10 (2007)
Issue (Month): 4 ()
Contact details of provider:
Web page: http://www.tandfonline.com/GPRE19
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Patricia Crifo & Marc-Arthur Diaye & Rim Oueghlissi, 2014. "Measuring the eff ect of government ESG performance on sovereign borrowing cost," Working Papers hal-00951304, HAL.
- Bastien Drut, 2009.
"Sovereign Bonds and Socially Responsible Investment,"
EconomiX Working Papers
2009-17, University of Paris West - Nanterre la Défense, EconomiX.
- Bastien Drut, 2010. "Sovereign Bonds and Socially Responsible Investment," Journal of Business Ethics, Springer, vol. 92(1), pages 131-145, April.
- Bastien Drut, 2009. "Sovereign Bonds and Socially Responsible Investment," Working Papers CEB 09-014.RS, ULB -- Universite Libre de Bruxelles.
- Carmelo León & Jorge Araña & Javier León, 2013. "Correcting for Scale Perception Bias in Measuring Corruption: an Application to Chile and Spain," Social Indicators Research, Springer, vol. 114(3), pages 977-995, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.