Sovereign Ratings and National Culture

Posted: 31 Mar 2020

See all articles by Huong D. Dang

Huong D. Dang

University of Canterbury

Graham Partington

University of Sydney - School of Business - Finance Discipline; Financial Research Network (FIRN)

Date Written: February 8, 2020


Default by sovereign governments depends upon their willingness to default and the nation’s capacity to pay. These are major factors considered by rating analysts and both may be affected by national culture. We hypothesise that ratings are related to culture and empirically examine the relation between culture and both levels and changes in sovereign ratings. Sovereign ratings have traditionally been modelled in terms of macro-economic variables, rating outlook and rating history. Culture variables are significant when included in such models and their addition results in better models as judged by the QIC statistic and likelihood ratio tests. The significance of culture variables is robust to replication and to estimation using instrumental variables.

Keywords: sovereign debt, sovereign rating, national culture, rating history, rating outlook, rating changes

JEL Classification: G24

Suggested Citation

Dang, Huong D. and Partington, Graham, Sovereign Ratings and National Culture (February 8, 2020). Pacific-Basin Finance Journal, Forthcoming, Available at SSRN:

Huong D. Dang (Contact Author)

University of Canterbury ( email )

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Christchurch, 8140
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Graham Partington

University of Sydney - School of Business - Finance Discipline ( email )

Building H69
Sydney NSW, 2006

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane


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