The Link between Adherence to International Standards of Good Practice, Foreign Exchange Spreads, and Ratings

33 Pages Posted: 29 Jan 2006

See all articles by Christofides Charas

Christofides Charas

International Monetary Fund (IMF) , Policy Development and Review

Christian Mulder

International Monetary Fund (IMF) - Policy Development and Review Department

Andrew Tiffin

International Monetary Fund (IMF)

Date Written: April 2003

Abstract

This paper examines the relationship between adherence to international standards of good practice in policy-making and two key indicators of access to capital markets and the cost of this access: spreads and sovereign ratings. In contrast to other work, this study reviews a broad set of indicators for adherence to international standards. The estimations are conducted for emerging market economies, and pay particular attention to issues of persistence in spreads and ratings and nonlinearities in the relationships. The main finding confirms the expectation that standards are indeed relevant. Accounting standards and property rights are especially important for spreads, in addition to data transparency (SDDS subscription). Accounting standards and corruption are especially important in explaining ratings in addition to trade protectiveness (not a standard).

Keywords: Standards and codes, foreign exchange spreads, credit ratings, crisis prevention

JEL Classification: F33

Suggested Citation

Charas, Christofides and Mulder, Christian and Tiffin, Andrew, The Link between Adherence to International Standards of Good Practice, Foreign Exchange Spreads, and Ratings (April 2003). IMF Working Paper No. 03/74, Available at SSRN: https://ssrn.com/abstract=879150

Christofides Charas (Contact Author)

International Monetary Fund (IMF) , Policy Development and Review ( email )

700 19th St. NW
Washington, DC 20431
United States

Christian Mulder

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States

Andrew Tiffin

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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