scholarly journals The Currency Composition of Sovereign Debt

2019 ◽  
Vol 11 (3) ◽  
pp. 174-208 ◽  
Author(s):  
Pablo Ottonello ◽  
Diego J. Perez
Keyword(s):  
Emerging Economies ◽  
Sovereign Debt ◽  
Foreign Currency ◽  
Quantitative Model ◽  
Currency Depreciation ◽  
Local Currency ◽  
Cyclical Behavior ◽  
The Government ◽  
Currency Composition ◽  
Shed Light

We study the currency composition of sovereign debt in emerging economies through the lens of a model in which the government lacks commitment regarding debt and monetary policy. High levels of debt in local currency give rise to incentives to dilute debt repayment through currency depreciation. Governments tilt the currency composition of debt toward foreign currency to avoid inflationary costs and real exchange rate distortions, at the expense of forgoing the hedging properties of local currency debt. Our quantitative model is used to shed light on the recent dynamics of the currency composition of debt and on its cyclical behavior. (JEL E31, E32, E52, F34, H63)

Rating sovereign debt in a monetary union – original sin by transnational governance

2015 ◽  
Vol 16 (3) ◽  
pp. 253-283 ◽  
Author(s):  
Finn Marten Körner ◽  
Hans-Michael Trautwein
Keyword(s):  
Monetary Union ◽  
Public Debt ◽  
Sovereign Debt ◽  
Foreign Currency ◽  
Debt Crisis ◽  
Emerging Market ◽  
Original Sin ◽  
Risk Assessments ◽  
Content Type ◽  
Local Currency

Purpose – The purpose of this paper is to test the hypothesis that major credit rating agencies (CRAs) have been inconsistent in assessing the implications of monetary union membership for sovereign risks. It is frequently argued that CRAs have acted procyclically in their rating of sovereign debt in the European Monetary Union (EMU), underestimating sovereign risk in the early years and over-rating the lack of national monetary sovereignty since the onset of the Eurozone debt crisis. Yet, there is little direct evidence for this so far. While CRAs are quite explicit about their risk assessments concerning public debt that is denominated in foreign currency, the same cannot be said about their treatment of sovereign debt issued in the currency of a monetary union. Design/methodology/approach – While CRAs are quite explicit about their risk assessments concerning public debt that is denominated in foreign currency, the same cannot be said about their treatment of sovereign debt issued in the currency of a monetary union. This paper examines the major CRAs’ methodologies for rating sovereign debt and test their sovereign credit ratings for a monetary union bonus in good times and a malus, akin to the “original sin” problem of emerging market countries, in bad times. Findings – Using a newly compiled dataset of quarterly sovereign bond ratings from 1990 until 2012, the panel regression estimation results find strong evidence that EMU countries received a rating bonus on euro-denominated debt before the European debt crisis and a large penalty after 2010. Practical implications – The crisis has brought to light that EMU countries’ euro-denominated debt may not be considered as local currency debt from a rating perspective after all. Originality/value – In addition to quantifying the local currency bonus and malus, this paper shows the fundamental problem of rating sovereign debt of monetary union members and provide approaches to estimating it over time.

scholarly journals Role of Credit in the Development of Ukraines Economy

2020 ◽  
Vol 22 (1) ◽  
pp. 18-23
Author(s):  
Yuliia Zahynailo ◽  
◽  
Oleksandr Doroshenko ◽  
Keyword(s):  
Financial Stability ◽  
Foreign Currency ◽  
Bank Lending ◽  
Local Currency ◽  
Current State ◽  
Government Lending ◽  
The Government ◽  
High Level ◽  
Key Indicators

Introduction. It is known that credit is a significant achievement of mankind. The emergence and development of credit took place on the basis of the money function as a means of circulation. The development of commodity production and the need for increased working capital are the economic reasons for the credit need. Purpose .The aim of the article is to determine the role of bank credit in the economy of Ukraine and analysis of key indicators of credit activity. Results. The dynamics of loans to residents by sectors of the economy and the types of currencies and maturities for loans were studied. Loans issued by types of economic activity were analyzed. The current enterprise lending programs in 2020, initiated by the Government of Ukraine was considered. The main directions for improving bank lending were identified. Conclusions. Following conclusions are based on the analysis of the current state of bank lending in Ukraine: – the maximum value of loans in 2018 amounting to 1,073,131 million, and the lowest in 2012 – 815,142 million; – according to the sectors of the economy, the largest share of lending is lending to non-financial corporations (70-80% depending on the year); – over the period of lending in local currency dominated loans in foreign exception is 2015; – the structure of loans according to maturity prevails in local currency short-term loans and foreign currency structure of loans according to maturity – homogeneous; – The Cabinet of the Ministry of Ukraine introduced two programs to support small and medium-sized businesses in the country: «Available loans 5-7-9%» and the program «New Money»; For the development of bank lending and the establishment of financial stability in Ukraine should: conduct active banks to attract customers to the government lending programs, in turn, a borrower for the loan according to the program, to properly open the financial statements and maintain business activity at a high level for real bank assessment of the borrower’s creditworthiness.

The Influence of Oil and Gas Exports on Russia’s Monetary Policy

2013 ◽  
pp. 4-19 ◽  
Author(s):  
A. Kudrin
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Dual Task ◽  
Oil And Gas ◽  
Foreign Currency ◽  
Balance Of Payments ◽  
Foreign Markets ◽  
Local Currency ◽  
Russian Economy ◽  
The Government

The article studies the problems of implementing monetary policy in the environment of a significant inflow of foreign currency revenues from exports of commodities into the country. It shows that in the conditions of strong balance of payments the Central Bank is forced to accept either the appreciation of the ruble or inflation. Only the government of Russia has at its disposal a powerful tool that allows both to prevent the appreciation of the local currency and to contain inflation at the same time. This dual task is solved by means of saving some part of oil and gas revenues in reserve funds during favorable situations on foreign markets. Such a policy lays the foundation for macroeconomic stability and ensures investment attractiveness of the Russian economy.

scholarly journals International Reserves and Rollover Risk

2018 ◽  
Vol 108 (9) ◽  
pp. 2629-2670 ◽  
Author(s):  
Javier Bianchi ◽  
Juan Carlos Hatchondo ◽  
Leonardo Martinez
Keyword(s):  
Emerging Economies ◽  
Quantitative Model ◽  
Sovereign Default ◽  
International Reserves ◽  
Upward Trend ◽  
Sovereign Spreads ◽  
Rollover Risk ◽  
Policy Frameworks ◽  
The Government

We study the optimal accumulation of international reserves in a quantitative model of sovereign default with long-term debt and a risk-free asset. Keeping higher levels of reserves provides a hedge against rollover risk, but this is costly because using reserves to pay down debt allows the government to reduce sovereign spreads. Our model, parameterized to mimic salient features of a typical emerging economy, can account for significant holdings of international reserves, and the larger accumulation of both debt and reserves in periods of low spreads and high income. We also show that income windfalls, improved policy frameworks, and an increase in the importance of rollover risk imply increases in the optimal holdings of reserves that are consistent with the upward trend in reserves in emerging economies. It is essential for our results that debt maturity exceeds one period. (JEL E21, E43, F32, F34, H63)

scholarly journals Sovereign default, domestic banks and exclusion from international capital markets

2020 ◽  
Author(s):  
Dominik Thaler
Keyword(s):  
Capital Markets ◽  
Sovereign Debt ◽  
Banking Sector ◽  
Quantitative Model ◽  
Sovereign Default ◽  
International Capital ◽  
International Capital Markets ◽  
Return On Capital ◽  
The Government ◽  
Domestic Banks

Abstract Why do governments borrow internationally, why do they temporarily remain out of international financial markets after default? I develop a quantitative model of sovereign default to propose a unified answer to these questions. In the model, the government has an incentive to borrow internationally since the domestic return on capital exceeds the world interest rate, due to a friction in the banking sector. Since banks are exposed to sovereign debt, sovereign default causes a financial crisis. After default, the government chooses to reaccess international capital markets only once banks have recovered and efficiently allocate investment again. Exclusion hence arises endogenously.

Deepening Integration

2017 ◽  
Author(s):  
Yilmaz Akyüz
Keyword(s):  
Emerging Economies ◽  
Financial Integration ◽  
Foreign Currency ◽  
Financial System ◽  
The United States ◽  
Bank Loans ◽  
Capital Inflows ◽  
Resident Participation ◽  
International Financial System ◽  
Private And Public

After recurrent crises with severe consequences in the 1990s and early 2000s EDEs have become even more closely integrated into what is now widely recognized as an inherently unstable international financial system. This chapter discusses the factors accelerating global financial integration of EDEs, including monetary policies in major advanced economies, notably the United States. It examines capital inflows and outflows, external balance sheets, the size and composition of gross external assets and liabilities, distinguishing between equity and debt, private and public sectors, local currency and foreign currency debt, bond issues and bank loans, and cross-border and local lending by international banks. It provides data and information on the currency composition of external debt, and non-resident participation in domestic financial markets of emerging economies. These are used to identify the changes in the depth and pattern of integration of emerging economies into the international financial system since the early 1990s.

Contributory Fault under International Law: A Gateway for Human Rights in ISDS?

2020 ◽  
Author(s):  
Farouk El-Hosseny ◽  
Patrick Devine
Keyword(s):  
Human Rights ◽  
International Law ◽  
Multinational Enterprises ◽  
Indigenous Rights ◽  
Business And Human Rights ◽  
Investment Treaty ◽  
Recent Developments ◽  
The Government ◽  
Bear Creek ◽  
Shed Light

Abstract The intersection between foreign investment and human rights is gaining attention, as is evident from an increasing number of investment treaty awards analysing legal issues relating to human rights. In the recent International Centre for the Settlement of Investment Disputes (ICSID) arbitration of Bear Creek v Peru, Philippe Sands QC posited, in a dissenting opinion, that the investor’s contribution to events—ie protests against its allegedly adverse environmental impact and disregard of indigenous rights, namely resulting from its ‘inability to obtain a “social licence”’—which led to the unlawful expropriation of its investment, was ‘significant and material’. He further noted that the investor’s ‘responsibilities are no less than those of the government’ and found that damages should thus be reduced. Last year, the Netherlands adopted a new model bilateral investment treaty (BIT), which allows tribunals to ‘take into account non-compliance by the investor with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises’ when assessing damages. These recent developments shed light on how states and tribunals, as part of their decision-making process, can take into account human rights in practice, and crucially in respect of damages analyses. By first dissecting the concept of contributory fault, then shedding light on the intersection of investment treaty law and human rights, as elucidated in recent jurisprudence, this article questions whether there now exists a gateway for human rights obligations (soft or hard) in the investment treaty arbitration realm through the concept of contributory fault.

Alberto Blest Gana: Four Chronicles and a Novel

2021 ◽  
Vol 5 (1) ◽  
pp. 123-135
Author(s):  
Laura Janina Hosiasson
Keyword(s):  
Utopian Fiction ◽  
Alberto Blest Gana ◽  
Close Relationship ◽  
The Face ◽  
The Government ◽  
The Relationship ◽  
Shed Light

Abstract Four chronicles written by Alberto Blest Gana between April and May 1862 in the newspaper La voz de Chile, months before the publication of his novel Mariluán, shed light on the close relationship between his production as chronicler and writer. Among the various faits divers discussed in the columns, the issue of a Mapuche delegation’s arrival in Santiago to hold a parlamento with the government about border disputes arises. The oscillating attitude of the chronicler in the face of otherness and his prejudiced comments, which are at the same time full of doubts and perplexities, serve as an incentive for his composing a utopian fiction. This article aims to examine the connections in the relationship between Blest Gana chronicler and novelist to expand the reading possibilities of Mariluán.

scholarly journals Impact of strategic management, corporate social responsibility on firm performance in the post mandate period: evidence from India

2021 ◽  
Vol 6 (1) ◽  
Author(s):  
Nayan Mitra
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Social Responsibility ◽  
Strategic Management ◽  
Emerging Economies ◽  
Brand Building ◽  
The Government ◽  
To Come ◽  
Key Aspects ◽  
Corporate Social

AbstractCorporate Social Responsibility (CSR) is like a chameleon, that changes its colour according to the context it is in. In the developed economy, it takes the form of sustainability and/ or philanthropy, whereas, in emerging economies, it speaks the language of religious, political and/ or mandated CSR. India, in recent times came into the limelight with its mandated CSR policy that was incorporated into its Companies Act 2013, which became operational from the financial year 2014 - 2015. Mandated CSR is thus a new area of study that is based on the philosophy that ‘CSR should contribute to the national agenda in emerging economies,’ under some statutory guidelines as laid down by the Government.But, business houses, do look for maximising its profit. Profit can be financial and/ or non-financial. If not money, then at least the effort must be compensated with reputation, image, that helps in brand building! And, to have this as an objective, their efforts should be strategic! But, does all strategies work? With these questions and conceptual thinking, this empirical research aims to identify the key aspects of Strategic Management, CSR and Firm Performance and establish relationship between them; apart from developing a valid and reliable scale to do so. This is indeed one of the first researches and documentations done among the large Indian firms in India immediately in the post mandate period and thus forms a base for understanding the CSR dynamics in the years to come.

Wining and Dining Government Officials: What Drives Political Networking in Chinese Private Ventures?

2020 ◽  
Vol 16 (5) ◽  
pp. 1084-1113
Author(s):  
Jianjun Zhang ◽  
Pei Sun ◽  
Kunyuan Qiao
Keyword(s):  
Emerging Economies ◽  
Resource Dependence ◽  
Institutional Environment ◽  
Resource Dependence Theory ◽  
Political Activity ◽  
Corporate Political Activity ◽  
Dyadic Relationship ◽  
Political Actors ◽  
Government Relations ◽  
The Government

ABSTRACTManagerial networking with political actors has long been recognized as a crucial co-option strategy to navigate the challenging institutional environment in emerging economies. However, we know much less about what drives the variation of political networking investment by private ventures. Drawing on resource dependence theory, we unpack the dyadic business-government relations and identify the key organizational and environmental factors that shape the power dependence relationships between private ventures and the government. By examining power imbalance and mutual dependence in this dyadic relationship and considering both the necessity and the capability of political networking, we develop hypotheses regarding the ways in which size-, connection-, and location-based dependencies affect firms’ political networking intensity. These hypotheses are tested through a unique survey of Chinese private ventures. Our study finds that political networking intensity (1) has an inverted U-shaped relationship with firm size, (2) is negatively associated with the presence of embedded political ties while positively associated with that of achieved political connections, and (3) is smaller when the focal firm is located in business development zones. This research bears rich implications for our understanding of corporate political activity in emerging economies from a resource dependence lens.

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