|Title: DETERMINANT FACTORS OF SOVEREIGN CREDIT RATINGS|
Tan Nghiem LE*, Viet Thanh Truc Tran, Huu Phan Thai and Bich Tuyen Duong
Using the results of credit ratings of 117 countries and territories in the period 2011-2017 provided by the Standard and Poor’s, the aim of this study is to examine the determinants of the sovereign debt credit ratings, especially the impact of financial system factors on the sovereign credit ratings. By employing the random effects ordered probit regression model, the research results show that inflation rate, central government debt, trade in services, liquid reserves of banking system negatively affect sovereign credit ratings, whereas current account balance, corruption index, the size of the banking system, the market capitalization of listed companies positively influence sovereign credit ratings. Considering the effects of financial system variables on sovereign credit ratings, several governance recommendations are given for governments and for central banks to improve the credit ratings of countries and territories.
|Keywords: Credit ratings, sovereign debts, random effects ordered probit model, factors related to financial sector, Standard and Poor’s.|