Sovereign Ratings and Finance Ministers’ Characteristics

Abstract

This paper empirically assesses the effect of a newly-compiled set of finance ministers´ characteristics on the setting by rating agencies of the long-term sovereign rating notations. Using a sample of 26 EU countries between 1980-2012, we find that the existence of more focused delegation-oriented fiscal framework, the Minister of Finance being a woman, and the Minister of Finance having a degree in the areas of finance or “hard sciences” seems to contribute to a better sovereign rating notation, and the opposite in the case of a Law background.

Keywords: sovereign ratings, ordered probit, sovereign debt, panel data, principal components

JEL Classification: C23, C25, E44, F30, G10, G12, H30