Finding the "democratic advantage" in sovereign bond ratings: The importance of strong courts, property rights protection, and the rule of law

Glen Biglaiser, Joseph L Staats

Research output: Contribution to journalArticle

40 Citations (Scopus)

Abstract

Much scholarship in the political economy literature has investigated the influence of the democratic advantage on sovereign bond ratings by credit rating agencies (CRAs). Missing from earlier work, however, is inquiry into the effects on bond ratings of factors that lower political risk, such as adherence to the rule of law, the presence of a strong and independent judicial system, and protection of property rights. Using panel data for up to thirty-six developing countries from 1996 to 2006, we find that rule of law, strong and independent courts, and protection of property rights have significant positive effects on bond ratings. Policymakers wanting to obtain higher bond ratings and increased revenue from bond sales would do well to heed the message contained in these findings. ©

Original languageEnglish (US)
Pages (from-to)515-535
Number of pages21
JournalInternational Organization
Volume66
Issue number3
DOIs
StatePublished - Jun 1 2012

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constitutional state
right of ownership
rating
sales
political economy
revenue
credit
Bond ratings
Rule of law
Property rights
Sovereign bonds
developing country

Cite this

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