TY - JOUR
T1 - Sovereign risk ratings
T2 - Biased toward developed countries?
AU - Gültekin-Karakaş, Derya
AU - Hisarciklilar, Mehtap
AU - Öztürk, Hüseyin
PY - 2011/5
Y1 - 2011/5
N2 - 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.
AB - 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.
KW - Credit-rating agencies
KW - ordered logit
KW - ordered probit
KW - political risk
KW - risk premium
KW - sovereign rating
UR - http://www.scopus.com/inward/record.url?scp=79959974680&partnerID=8YFLogxK
U2 - 10.2753/REE1540-496X4703S204
DO - 10.2753/REE1540-496X4703S204
M3 - Article
AN - SCOPUS:79959974680
SN - 1540-496X
VL - 47
SP - 69
EP - 87
JO - Emerging Markets Finance and Trade
JF - Emerging Markets Finance and Trade
IS - SUPPL. 2
ER -