The external debt overhang problem as a threat to global financial security

Redo, Magdalena

doi:10.2478/lape-2018-0004

Cited by 5 publications

(5 citation statements)

References 7 publications

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“…More and more capital on global markets caused a significant decrease in its cost but, at the same time, enforced increased acceptance of investment risk and its underestimation, leading to its extremizationrisk taking phenomenon. Easy access and cheap capital prompt even more debt, which raises concerns about the debt level globally in the next decades and risks resulting from such debtthe growing risk of insolvency and decreased development of most indebted entities, including the global economy (Redo, 2018a).…”

Section: Summary and Concluding Commentsmentioning

confidence: 99%

Globalization in Growing Financial Markets as a Threat to the Financial Security of the Global Economy

Redo¹,

Gębska²

2020

ERSJ

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Section: Summary and Concluding Commentsmentioning

confidence: 99%

Globalization in Growing Financial Markets as a Threat to the Financial Security of the Global Economy

Redo¹,

Gębska²

2020

ERSJ

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“…Bez wątpienia utrudnia im to nadrabianie zaległości rozwojowych i pogłębia dystans do rozwiniętych państw. Ponadto kryzysy przeżywają boleśniej i trudniej się z nich podnoszą (Redo 2017).…”

Section: Państwa O Największym Zadłużeniu Zagranicznym 10unclassified

External financial security of the state

Redo

Siemiątkowski

2017

TIS

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“…The rating agencies downgrade sovereign rating scores over rising debt levels (Chee et al , 2015). The debt overhang problem is most exigent for emerging markets with high external exposures through high investor risk premium, leading to enhanced financial cost and reduced growth prospects (Redo, 2018). Such correlation between debt levels and cost of borrowings is considerably higher in countries with weak creditor rights and past sovereign default episodes (Agca and Celason, 2012).…”

Section: Introductionmentioning

confidence: 99%

Sovereign credit ratings and bond yield spreads in emerging markets

Nair

2019

JFEP

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Purpose This paper, using the model suggested by Cantor and Pecker (1996), aims to explore the relations between sovereign ratings and bond yield spreads in emerging markets. Design/methodology/approach The ordinary least square regression procedure administered on the most recent sovereign ratings of 46 countries demonstrates how the macroeconomic information embody in the sovereign rating scores predict their bond yield spreads relative to the yield on US Treasury bond. Findings The research finds that the assigned rating scores do not herald the complete elites of the macroeconomic conditions in emerging markets, and there is more incremental information in the publicly available macroeconomic variables, which is much useful in predicting bond yield spreads than that embedded into the sovereign ratings. Practical implications The outcomes of the research have strategic implications for global investors and policymakers. The use of credit rating scores along with the macroeconomic fundamentals in emerging economies produces better predictions than the benchmark predictions solely based on the rating scores suggested by the previous research. Originality/value This study is the first one to address the issues related to sovereign ratings and bond yield spread in developing and emerging markets using the most recent ratings during the period of the economic recoveries, following the global financial crisis of 2008.

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The external debt overhang problem as a threat to global financial security

Cited by 5 publications

References 7 publications

Globalization in Growing Financial Markets as a Threat to the Financial Security of the Global Economy

Globalization in Growing Financial Markets as a Threat to the Financial Security of the Global Economy

External financial security of the state

Sovereign credit ratings and bond yield spreads in emerging markets

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