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

By Andrew J Tiffin, Christian B. Mulder, Charalambos Christofides

April 1, 2003

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Format: Chicago

Andrew J Tiffin, Christian B. Mulder, and Charalambos Christofides. The Link Between Adherence to International Standards of Good Practice, Foreign Exchange Spreads, and Ratings, (USA: International Monetary Fund, 2003) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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).

Subject: Accounting standards, Credit ratings, Economic and financial statistics, Financial regulation and supervision, Foreign exchange, Money, Public financial management (PFM), Special Data Dissemination Standard (SDDS)

Keywords: Accounting standards, Asia and Pacific, Country examples fpor, Credit ratings, Crisis prevention, Emerging-market country, Financial market, Foreign exchange spreads, General Data dissemination system, Lowest-and-highest rated country, Opacity index, Ratings Index, Short-term debt, Single standard, Sovereign bond, Special Data Dissemination Standard (SDDS), Standard and Poor's, Standards and codes, Trade restrictiveness index, WEF favoritism variable, WEF government, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/074
Stock No:

WPIEA0742003
ISBN:

9781451849615
ISSN:

1018-5941

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