The Link Between Adherence to International Standards of Good Practice, Foreign Exchange Spreads, and Ratings
IMF Working Papers, April 1, 2003
Source details
- Canonical URL
- The Link Between Adherence to International Standards of Good Practice, Foreign Exchange Spreads, and Ratings
Other formats
Bibliographic details
- Authors: Andrew J Tiffin, Christian B. Mulder, Charalambos Christofides
- Published: April 1, 2003
- Series: IMF Working Papers
Overview and Purpose
- Authors: Andrew J Tiffin, Christian B. Mulder, Charalambos Christofides
- Publication date: April 1, 2003
- Series: Working Paper No. 2003/074
- Issue: 074; Volume: 2003; Pages: 31
- ISBN: 9781451849615; ISSN: 1018-5941
- Objective: Examine the relationship between adherence to international standards of good practice in policy-making and two indicators of market access and cost: spreads and sovereign ratings, focusing on emerging market economies and accounting for persistence and nonlinearities.
Data, Scope, and Methodology
- Sample focus: Emerging market economies.
- Standards examined: A broad set of indicators for adherence to international standards of good practice (including accounting standards and the Special Data Dissemination Standard (SDDS) subscription).
- Econometric focus:
- Attention to persistence in spreads and ratings.
- Investigation of nonlinearities in the relationships between standards and outcomes.
Main Findings
- General finding:
- "Standards are indeed relevant" for both foreign exchange spreads and sovereign ratings.
- For foreign exchange spreads:
- Accounting standards are especially important.
- Property rights are especially important.
- Data transparency (SDDS subscription) is important.
- For sovereign ratings:
- Accounting standards are especially important.
- Corruption is especially important.
- Trade protectiveness (not an international standard) is also important in explaining ratings.
Subject Areas and Keywords
- 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
Implications for Policy and Practice
- Strengthening accounting standards and property rights can reduce foreign exchange spreads for emerging market economies.
- Enhancing data transparency, including SDDS subscription, contributes to better market access outcomes.
- Improving accounting standards and reducing corruption can lead to better sovereign ratings.
- Addressing trade protectiveness may influence sovereign ratings despite not being an international standard.
Source: IMF Working Papers, "The Link Between Adherence to International Standards of Good Practice, Foreign Exchange Spreads, and Ratings", Working Paper No. 2003/074, April 1, 2003.