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

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Catarina Proença ◽  
Maria Neves ◽  
José Carlos Dias ◽  
Pedro Martins
Keyword(s):  
Developing Countries ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Time Frame ◽  
European Countries ◽  
Content Type ◽  
Explanatory Variables ◽  
Rating Agencies ◽  
Panel Data Estimation ◽  
The Global Financial Crisis

Purpose This paper aims to study the determinants of the sovereign debt ratings provided by the 3 main rating agencies for 32 European countries. It verifies the clusters of countries existing for each of the agencies, considering regional bias, and then analyzes whether the determinants were different before and after the global financial crisis. It also aims to explain how the determinants are taken into account for rich and developing countries, using a sample for the period between 2001 and 2008 and the period between 2009 and 2016. Design/methodology/approach To this purpose, this paper performs panel data estimation using an ordered Probit approach. Findings This method shows that for developing countries after the crisis, the relevant explanatory variables are the unemployment rate and the presence in the Eurozone. For rich countries, the inflation rate is pivotal after the crisis period. Originality/value This paper is the first to use a clustering methodology within sovereign debt rating literature, grouping the countries into cohesive clusters according to their sovereign debt ratings along with the proposed time frame. Moreover, it explains, which countries belong to strong or weak groups, according to the rating agencies under discussion; and, in these groups, it identifies the sovereign rating determinants.

scholarly journals Alternative measures for predicting financial distress in the case of Malaysian Islamic banks: assessing the impact of global financial crisis

2020 ◽  
Vol 11 (9) ◽  
pp. 1827-1845
Author(s):  
Mehmet Asutay ◽  
Jaizah Othman
Keyword(s):  
Financial Crisis ◽  
Financial Distress ◽  
Global Financial Crisis ◽  
Islamic Banks ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Explanatory Variables ◽  
Alternative Funding ◽  
The Global Financial Crisis ◽  
The Impact

Purpose The global financial crisis of 2008 still has an impact on the financial systems around the world, for which funding liquidity has been mentioned as one of the main concerns during that period. This study aims to consider the impact of and extent to which the funding structure of Islamic banks along with deposit structure, macroeconomic variables, other bank-specific variables, including alternative funding mix variables (in terms of funding structure measured as financing/deposit ratio), could play a part in explaining the financial conditions and predicting the failures and performances of Islamic banks in the case of Malaysia under the distress created by the global financial crisis. Design/methodology/approach Multivariate logit model was used with a sample including 17 full-fledged Islamic banks in Malaysia for the period from December 2005 to September 2010 by using quarterly data. Findings This study found that the funding mix variable (financing/deposit ratio), the composition of deposits, alternative bank-specific variables and alternative funding mix variables are statistically significant. In contrast, none of the macroeconomic variables is found to have a significant impact on bank liquidity. In the final models, the variables that showed significant performance were selected as explanatory variables. The results of McFadden R-squared for both selected models showed an excellent fit to predict the Islamic banks’ performance. Originality/value This empirical study contributes to the literature in two ways: to the best of the authors’ knowledge, this is the first study to examine the role of the funding structures of Islamic banks in determining their performance; and it also examines the effect of deposit composition (the mudharabah and non-mudharabah deposits) on Islamic banks’ performance.

Business founders and performance of family firms: evidence from developing countries in Asia

2020 ◽  
Vol 15 (2) ◽  
pp. 217-239
Author(s):  
Yee Peng Chow
Keyword(s):  
Developing Countries ◽  
Family Firms ◽  
Global Financial Crisis ◽  
Developed Countries ◽  
Ordinary Least Squares ◽  
Superior Performance ◽  
Least Squares Regression ◽  
Content Type ◽  
And Performance ◽  
The Global Financial Crisis

Purpose The purpose of this study is to examine how business founders influence the performance of family firms in developing countries in Asia. Design/methodology/approach The pooled ordinary least squares regression is used on a sample of 134 public listed family firms from four developing countries in Asia during the period 2004–2014. This study also conducts sub-period analyses where the study period is divided into three sub-periods, i.e. before, during and after the global financial crisis (GFC). Findings This study finds that founder-led family firms outperform family firms led by nonfounders for the full study period. The results for the sub-period analyses also show that founder-led family firms outperform nonfounder-led family firms for the pre-crisis and during crisis periods. Finally, this study finds no evidence supporting the superior performance of founder-led family firms post-GFC. Originality/value Because family firm is one of the most fundamental forms of business organization in the world, policymakers have great concerns about how business founders influence the performance of these firms. Nonetheless, the existing research on family firms is chiefly concentrated on developed countries but there is a paucity of studies being conducted in the context of developing countries. Moreover, previous research has only considered the performance of these firms during normal or turbulent times but no prior studies have compared the firm performance during normal, turbulent and recovery periods. It is the aim of this paper to address these research gaps by using a new and more recent set of data.

Renminbi internationalisation will gather pace

2015 ◽  
Keyword(s):  
Sovereign Debt ◽  
Global Financial Crisis ◽  
International Accounting Standards ◽  
Content Type ◽  
Special Drawing ◽  
State Administration ◽  
Onshore And Offshore Markets ◽  
The Global Financial Crisis ◽  
Special Drawing Rights ◽  
Central Bank Governor

Subject Renminbi internationalisation. Significance The State Administration of Foreign Exchange on May 12 announced that it will adopt the latest international accounting standards for its balance of payments data. This may strengthen China's bid this year for inclusion in the IMF's Special Drawing Rights (SDR) currency basket. Central bank governor Zhou Xiaochuan said last month that China is making the renminbi more 'freely usable' in order to qualify. Liberalisation of the renminbi has been accelerated since the global financial crisis, as China seeks to establish a more balanced economy, including a larger and open financial sector and -- with it -- a convertible currency and more open capital account. Impacts China does not want the renminbi to replace the dollar as the world's reserve currency. The renminbi bond market will grow as the division between onshore and offshore markets erodes. Larger quotas are likely for foreign financial institutions to invest in China's domestic financial markets. More Western governments are likely to issue sovereign debt in renminbi. There is still much scope for greater use of the renminbi in trade settlement.

Oil volatility index and Chinese stock markets during financial crisis: a time-varying perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Panayiotis Tzeremes
Keyword(s):  
Financial Crisis ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Debt Crisis ◽  
Subprime Crisis ◽  
Content Type ◽  
Volatility Index ◽  
The Us ◽  
Three Stages ◽  
The Global Financial Crisis

Purpose This study aims to examine the interconnection among the oil volatility index (OVX) and the Chinese stock markets (CSM) during the financial crisis over the period June 1, 2007 to June 26, 2012. Design/methodology/approach Applying the time-varying Granger causality test, this paper conducts an exhaustive analysis of the OVX and the CSMs during the financial crisis. In particular, the financial crisis is classified in three stages, namely, the US subprime crisis, the global financial crisis and the sovereign debt crisis. Findings Briefly, the findings indicate almost a neutral relationship between the OVX and the CSMs during the entire financial crisis, the US subprime crisis and the global financial crisis. Finally, this paper has found a positive relationship between the OVX and the CSMs during the sovereign debt crisis. Practical implications This outcome clearly suggests that Chinese investors have to disregard uncertain information. In addition, policymakers can ameliorate the willingness of market investors in the CSM and further deepen the market-oriented reform of China’s domestic oil prices. Originality/value The innovative combination of these two strands, the OVX and the three stages of the financial crisis, is empirically examined in the study and this paper finds a non-linear linkage between the OVX and CSMs.

scholarly journals Observations of deglobalization against globalization and impacts on global business

2020 ◽  
Vol 4 (2) ◽  
pp. 83-103
Author(s):  
Hag-Min Kim ◽  
Ping Li ◽  
Yea Rim Lee
Keyword(s):  
Developing Countries ◽  
Panel Data ◽  
Global Financial Crisis ◽  
Developed Countries ◽  
Negative Influence ◽  
Global Business ◽  
Content Type ◽  
Business Executive ◽  
Statistical Measures ◽  
The Global Financial Crisis

PurposeThis study aims to investigate current deglobalization against globalization and to hypothesize reasons and drivers of deglobalization. In addition, the study suggests an empirical model to test whether deglobalization exists in the world economy. The consequences of deglobalization are discussed.Design/methodology/approachVarious measures for deglobalization are introduced for monitoring the deglobalization of a country, and statistical measures are reported. The research framework for deglobalization and empirical models are suggested. The relationship between deglobalization and globalization is being modeled using three KOF globalization indexes: economic, political and societal. This study used panel data from 1970 to 2017 for developed and developing countries to determine the degree of deglobalization.FindingsDeglobalization has been found empirically since the global financial crisis. Deglobalization is estimated by the decreasing trend of import share in a country's gross domestic product and is influenced by manufacturing imports, country's income divide and political globalization. Both economic and societal globalizations have negative influence on deglobalization. Deglobalization is more apparent in developed countries than in developing countries, and the deglobalization trend will continue in diverse formats.Research limitations/implicationsThis study limits the use of few variables to test the antecedents of deglobalization. Another study can be done to extend preceding variables and estimate the consequences of deglobalization, which may segregate the globalization effect. The international business executive should understand the complexity of deglobalization and consider business benefits and risks to be encountered.Originality/valueThis study used panel data from 1970 to 2017 for developed and developing countries to determine the degree of deglobalization.

Welfare Reform in Greece

2017 ◽  
Author(s):  
Maria Petmesidou
Keyword(s):  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Debt Crisis ◽  
Refugee Crisis ◽  
Social Investment ◽  
New Parties ◽  
Future Direction ◽  
The Global Financial Crisis ◽  
Spending Cuts ◽  
Large Sections

Greece developed a pension-heavy, clientelist, hybrid Mediterranean welfare state with many gaps in coverage. The global financial crisis of 2008 triggered a severe sovereign debt crisis, compelling the country to accept three bailout packages with stringent conditions as to spending cuts, privatization, and openness to international competition. Severe austerity has caused a protracted recession: the economy lost more than a quarter of its GDP between 2008 and 2015. The Mediterranean refugee crisis impacted severely on the country. New parties of the extreme left (SYRIZA) and extreme right (Golden Dawn) have gained support. SYRIZA was elected on an anti-austerity platform but failed to deliver and a fourth rescue package is under negotiation. The more likely future direction consists in an ever-tighter austerity programme with the immizeration of large sections of the population. A move towards neo-Keynesian intervention and social investment seems unlikely, given the level of debt and the bailout conditions.

Conclusion

2018 ◽  
Author(s):  
Nauro F. Campos ◽  
Paul De Grauwe ◽  
Yuemei Ji
Keyword(s):  
Financial Crisis ◽  
Business Cycle ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Debt Crisis ◽  
Structural Reform ◽  
Structural Reforms ◽  
Sovereign Debt Crisis ◽  
The Business Cycle ◽  
The Global Financial Crisis

Structural reform policies move like the business cycle. There are moments when these are implemented with great fervour and others when they are put on the back burner or even dismantled. After the global financial crisis, and in particular the sovereign debt crisis in Europe, many countries were forced by creditor countries or were self-imposed to apply deep reforms to their product markets and especially to their labour markets. Now that Europe is recovering, the pressure to implement structural reforms has abated....

Financial distress determinants among SMEs: empirical evidence from Sweden

2020 ◽  
Vol 47 (3) ◽  
pp. 547-560 ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Financial Crisis ◽  
Financial Distress ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Binary Logistic Regression ◽  
Data Availability ◽  
Cross Sectional ◽  
Data Set ◽  
Content Type ◽  
The Global Financial Crisis

PurposeThe purpose of this study is to empirically investigate determinants of financial distress among small and medium-sized enterprises (SMEs) during the global financial crisis and post-crisis periods.Design/methodology/approachSeveral statistical methods, including multiple binary logistic regression, were used to analyse a longitudinal cross-sectional panel data set of 3,865 Swedish SMEs operating in five industries over the 2008–2015 period.FindingsThe results suggest that financial distress is influenced by macroeconomic conditions (i.e. the global financial crisis) and, in particular, by various firm-specific characteristics (i.e. performance, financial leverage and financial distress in previous year). However, firm size and industry affiliation have no significant relationship with financial distress.Research limitationsDue to data availability, this study is limited to a sample of Swedish SMEs in five industries covering eight years. Further research could examine the generalizability of these findings by investigating other firms operating in other industries and other countries.Originality/valueThis study is the first to examine determinants of financial distress among SMEs operating in Sweden using data from a large-scale longitudinal cross-sectional database.

Global financial crisis, ownership structure and firm financial performance

2017 ◽  
Vol 34 (4) ◽  
pp. 447-465 ◽  
Author(s):  
Ali Salman Saleh ◽  
Enver Halili ◽  
Rami Zeitun ◽  
Ruhul Salim
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Ownership Structure ◽  
Family Firms ◽  
Global Financial Crisis ◽  
Ownership Concentration ◽  
Financial Leverage ◽  
Content Type ◽  
Crisis Period ◽  
The Global Financial Crisis

Purpose This paper aims to investigate the financial performance of listed firms on the Australian Securities Exchange (ASX) over two sample periods (1998-2007 and 2008-2010) before and during the global financial crisis periods. Design/methodology/approach The generalized method of moments (GMM) has been used to examine the relationship between family ownership and a firm’s performance during the financial crisis period, reflecting on the higher risk exposure associated with capital markets. Findings Applying firm-based measures of financial performance (ROA and ROE), the empirical results show that family firms with ownership concentration performed better than nonfamily firms with dispersed ownership structures. The results also show that ownership concentration has a positive and significant impact on family- and nonfamily-owned firms during the crisis period. In addition, financial leverage had a positive and significant effect on the performance of Australian family-owned firms during both periods. However, if the impact of the crisis by sector is taking into account, the financial leverage only becomes significant for the nonmining family firms during the pre-crisis period. The results also reveal that family businesses are risk-averse business organizations. These findings are consistent with the underlying economic theories. Originality/value This paper contributes to the debate whether the ownership structure affects firms’ financial performance such as ROE and ROA during the global financial crisis by investigating family and nonfamily firms listed on the Australian capital market. It also identifies several influential drivers of financial performance in both normal and crisis periods. Given the paucity of studies in the area of family business, the empirical results of this research provide useful information for researchers, practitioners and investors, who are operating in capital markets for family and nonfamily businesses.

How firms borrow in international bond markets

2018 ◽  
Vol 26 (1) ◽  
pp. 135-169
Author(s):  
Alberto Fuertes ◽  
Jose María Serena
Keyword(s):  
Emerging Economies ◽  
Design Methodology ◽  
Choice Behavior ◽  
Global Financial Crisis ◽  
Securities And Exchange Commission ◽  
Bond Markets ◽  
Data Set ◽  
Content Type ◽  
Parametric Analyses ◽  
The Global Financial Crisis

Purpose This paper aims to investigate how firms from emerging economies choose among different international bond markets: global, US144A and Eurobond markets. The authors explore if the ranking in regulatory stringency –global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – leads to a segmentation of borrowers. Design/methodology/approach The authors use a novel data set from emerging economy firms, treating them as consolidated entities. The authors also obtain descriptive evidence and perform univariate non-parametric analyses, conditional and multinomial logit analyses to study firms’ marginal debt choice decisions. Findings The authors show that firms with poorer credit quality, less ability to absorb flotation costs and more informational asymmetries issue debt in US144A and Eurobond markets. On the contrary, firms issuing global bonds – subject to full Securities and Exchange Commission requirements – are financially sounder and larger. This exercise also shows that following the global crisis, firms from emerging economies are more likely to tap less regulated debt markets. Originality/value This is, to the authors’ knowledge, the first study that examines if the ranking in stringency of regulation – global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – is consistent with an ordinal choice by firms. The authors also explore if this ranking is monotonic in all determinants or there are firm-specific features which make firms unlikely to borrow in a given market. Finally, the authors analyze if there are any changes in the debt-choice behavior of firms after the global financial crisis.

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