Politicians’ connections and sovereign credit ratings

IF 5.4 2区经济学 Q1 BUSINESS, FINANCE

Journal of International Financial Markets Institutions & Money Pub Date : 2024-06-21 DOI:10.1016/j.intfin.2024.102022

Patrycja Klusak , Yurtsev Uymaz , Rasha Alsakka

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引用次数: 0

Abstract

Using a unique hand-collected sample of professional connections between finance ministers and the top executives of the three largest credit rating agencies (CRAs) for 38 European sovereigns between January 2000 and November 2017, we show that professional connections result in higher sovereign ratings. This finding is attributed to ‘favoritism’, which stems from the conflict-of-interest problem in the CRA business model. We also find that the subjective component of ratings, captured by professional connections, has a more pronounced role for developing than developed countries. Our study offers new empirical evidence that unsolicited sovereign ratings are significantly lower than solicited ratings. Our results survive battery of robustness checks including propensity score matching (PSM), two-way fixed-effects, system GMM and various definitions of connection. Our findings offer wide-ranging implications for regulators, governments, market participants and CRAs.

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政治家的关系和主权信用评级

我们利用手工收集的独特样本，对 2000 年 1 月至 2017 年 11 月间欧洲 38 个主权国家的财政部长与三大信用评级机构（CRA）高层管理人员之间的职业联系进行了分析，结果表明，职业联系会导致主权评级提高。这一发现归因于 "偏袒"，而 "偏袒 "源于信用评级机构业务模式中的利益冲突问题。我们还发现，专业关系所反映的评级主观成分对发展中国家的作用比对发达国家的作用更为明显。我们的研究提供了新的经验证据，表明主动提供的主权评级明显低于主动提供的评级。我们的研究结果经受住了一系列稳健性检验，包括倾向得分匹配（PSM）、双向固定效应、系统 GMM 和各种联系定义。我们的研究结果对监管机构、政府、市场参与者和评级机构具有广泛的启示意义。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of International Financial Markets Institutions & Money Multiple-

CiteScore

6.60

自引率

10.00%

发文量

142

期刊介绍： International trade, financing and investments, and the related cash and credit transactions, have grown at an extremely rapid pace in recent years. The international monetary system has continued to evolve to accommodate the need for foreign-currency denominated transactions and in the process has provided opportunities for its ongoing observation and study. The purpose of the Journal of International Financial Markets, Institutions & Money is to publish rigorous, original articles dealing with the international aspects of financial markets, institutions and money. Theoretical/conceptual and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • International financial markets • International securities markets • Foreign exchange markets • Eurocurrency markets • International syndications • Term structures of Eurocurrency rates • Determination of exchange rates • Information, speculation and parity • Forward rates and swaps • International payment mechanisms • International commercial banking; • International investment banking • Central bank intervention • International monetary systems • Balance of payments.