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The Link Between Adherence to International Standards of Good Practice, Foreign Exchange Spreads, and Ratings

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Author Info
Charalambos Christofides
Christian B. Mulder
Andrew Tiffin
Abstract

This paper examines the relationship between adherence to international standards of good practice in policy-making and two key indicators of access to capital markets and the cost of this access: spreads and sovereign ratings. In contrast to other work, this study reviews a broad set of indicators for adherence to international standards. The estimations are conducted for emerging market economies, and pay particular attention to issues of persistence in spreads and ratings and nonlinearities in the relationships. The main finding confirms the expectation that standards are indeed relevant. Accounting standards and property rights are especially important for spreads, in addition to data transparency (SDDS subscription). Accounting standards and corruption are especially important in explaining ratings in addition to trade protectiveness (not a standard).

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/74.

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Length: 31 pages
Date of creation: 22 Apr 2003
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Handle: RePEc:imf:imfwpa:03/74

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Keywords: Standards and codes ; Foreign exchange ; Credit ; Crisis prevention ; Emerging markets ; Economic models ;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  4. Christian B. Mulder & Brieuc Montfort, 2000. "Using Credit Ratings for Capital Requirements on Lending to Emerging Market Economies - Possible Impact of a New Basel Accord," IMF Working Papers 00/69, International Monetary Fund.
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  8. Roberto Perrelli & Christian B. Mulder, 2001. "Foreign Currency Credit Ratings for Emerging Market Economies," IMF Working Papers 01/191, International Monetary Fund. [Downloadable!]
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  16. Barth, James R. & Caprio Jr., Gerard & Levine, Ross, 2001. "Bank regulation and supervision : what works best?," Policy Research Working Paper Series 2725, The World Bank. [Downloadable!]
    Other versions:
  17. Johnson, Simon & Boone, Peter & Breach, Alasdair & Friedman, Eric, 2000. "Corporate governance in the Asian financial crisis," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 141-186. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stanley Watt & Saade Chami & Donal McGettigan, 2007. "Jordan's International Reserve Position: Justifiably Strong," IMF Working Papers 07/103, International Monetary Fund. [Downloadable!]
  2. John Cady & Anthony J. Pellechio, 2006. "Sovereign Borrowing Cost and the IMF's Data Standards Initiatives," IMF Working Papers 06/78, International Monetary Fund. [Downloadable!]
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