Sovereign Debt and Sustainable Development Culture

27 Pages Posted: 20 Jul 2013 Last revised: 28 Nov 2013

See all articles by Andreas G. F. Hoepner

Andreas G. F. Hoepner

Smurfit Graduate Business School, University College Dublin; European Commission - DG FISMA

Agnes Neher

University of Hohenheim

Date Written: July 18, 2013


The sovereign debt crisis indicated that conventional methods of assessing sovereign debt might need to be extended with new information sets. One of this new information sets could be indicators of a sustainability focused national culture based on social, environmental and political issues. This paper examines the relationship between government bond yields and the longest established rating of national sustainability culture: the "oekom country rating" of oekom research AG, which was launched in 2001. We hypothesize that sustainability culture reduces government bond yields. Based on an eleven year sample (2002-2012) and controlling for traditional economic determinants of bond yields, we find a negative and significant relationship between sovereign debt and sustainability culture. This implies that institutional investors might want to consider sustainability related information in their sovereign fixed income investment decisions. Similarly, conventional raters of sovereign debt (i.e. Fitch, Moody’s and S&P) might want to extend their consideration of sustainability culture in their ratings.

Keywords: sovereign debt, sustainability culture indicators, government bond yield

JEL Classification: E43, E44, Q01

Suggested Citation

Hoepner, Andreas G. F. and Neher, Agnes, Sovereign Debt and Sustainable Development Culture (July 18, 2013). Available at SSRN: or

Andreas G. F. Hoepner

Smurfit Graduate Business School, University College Dublin ( email )

Blackrock, Co. Dublin

European Commission - DG FISMA ( email )

2 Rue de Spa
Brussels, 1000

Agnes Neher (Contact Author)

University of Hohenheim ( email )


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