Sovereign ratings and national culture

Abstract

Default by sovereign governments depends upon their willingness to default and the nation's capacity to pay. These are major factors considered by rating analysts and both may be affected by national culture. We hypothesise that ratings are related to culture and empirically examine the relation between culture and both levels and changes in sovereign ratings. Sovereign ratings have traditionally been modelled in terms of macroeconomic variables, rating outlook and rating history. Culture variables are significant when included in such models and their addition results in better models as judged by the QIC statistic and likelihood ratio tests. The significance of culture variables is robust to replication and to estimation using instrumental variables.

Determinants of sovereign debt ratings in clusters of European countries – effects of the crisis

“…Afonso et al (2007) show that, since the Asian crisis, international reserves have taken on greater importance. Recently, Dang and Partington (2020) have shown that culture has an impact on sovereign ratings and Fuchs and Gehring (2017) have found that culturally familiar countries have higher and similar ratings.…”

A kinetic description of the impact of agent competence and psychological factors on investment decision-making

“…Thus, these factors relating to the agent's behavior need to be considered in the model describing the evolution of investment decisions. Xuan and Dang [1] analyzed herding behavior patterns under different stock portfolios and revealed the existence of herding behavior in particular industry. Zhang and Wang [2] employed the complex network method to investigate the correlation between herding behavior and the overconfidence behavior of investors.…”