Access to Credit by Firms and Sovereign Credit Rating Stability
28 Pages Posted: 15 Nov 2019
Date Written: July 27, 2019
This paper studies the impact of the number of sovereign credit rating and outlook changes on the access to credit by firms. The data sample consists of 127,000 firms from 139 countries surveyed by World Bank over the period, 2006 to 2016. An ordered logit model is used as a primary tool for empirical analysis. It finds a significant negative relation between the instability of sovereign rating and outlooks; and the access to credit by firms. A collection of sub-sample analyses across rating agencies and country groups validate the results.
Keywords: Sovereign Risk, Sovereign Ceiling, Financial Constraints, Firm’s Behavior, Financial Development
JEL Classification: D22, G21, G24, G30, H63, O16
Suggested Citation: Suggested Citation