Access to Credit by Firms and Sovereign Credit Rating Stability

28 Pages Posted: 15 Nov 2019

See all articles by Yasir Riaz

Yasir Riaz

Namal Institute Mianwali; Lahore University of Management Sciences

Choudhry Tanveer Shehzad

SDSB, Lahore University of Managment Sciences

Robert W. Faff

University of Queensland

Date Written: July 27, 2019

Abstract

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

Riaz, Yasir and Shehzad, Choudhry Tanveer and Faff, Robert W., Access to Credit by Firms and Sovereign Credit Rating Stability (July 27, 2019). Available at SSRN: https://ssrn.com/abstract=3482275 or http://dx.doi.org/10.2139/ssrn.3482275

Yasir Riaz (Contact Author)

Namal Institute Mianwali ( email )

Mianwali, Punjab 42250
Pakistan

HOME PAGE: http://www.namal.edu.pk/

Lahore University of Management Sciences ( email )

D.H.A, Lahore Cantt
Lahore, Punjab 54792
Pakistan

HOME PAGE: http://www.lums.edu.pk

Choudhry Tanveer Shehzad

SDSB, Lahore University of Managment Sciences ( email )

D.H.A, Lahore Cantt
Lahore, Punjab 54792
Pakistan

Robert W. Faff

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
6
Abstract Views
84
PlumX Metrics