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Sovereign borrowing by developing countries

Sovereign borrowing by developing countries. WHAT DETERMINES MARKET ACCESS ??. MARKET ACCESS. Publicly guaranteed international bond issuances or borrowing through a private syndicated bank loan. WHAT IS SYNDICATED LOAN ?.

brian-blevins
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Sovereign borrowing by developing countries

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  1. Sovereign borrowing by developing countries

  2. WHAT DETERMINES MARKET ACCESS ??

  3. MARKET ACCESS Publicly guaranteed international bond issuances or borrowing through a private syndicated bank loan.

  4. WHAT IS SYNDICATED LOAN ?

  5. The main goal of a syndicated lending is to spread the risk of a borrower default across multiple lender. Syndicated loans tend to be much larger than standard bank loans.

  6. Factors affecting market access The size of a country İncome volatility and vulnerability A country’s economic links Political instability The quality of government policies and institutions A country’s liquidity Multilateral assistance Sovereign defaults Control variables

  7. EMPIRICAL STRATEGY The sample has 139 countries and the period is 1980-2000. Creditor Countries (Oil producing country) Developing Country Private sector ‘in’ Sovereign ‘credit constrain’

  8. Cross – sectıonal analysıs

  9. Small <5 million Medium 5<..<20million • Size and per capita income seem to have in determining market access we divide all countries 3 groups according to their size Large 20< million

  10. Middle 1000$<..<2000$ Low <1000$ We divide all countries 3 groups according to their income per capita High <2000$

  11. According to our findings above; • The size of a country,the GDP per capita,the quality of policies,measures of output volatility.the ratio of FDI to GDP,being in default and the coefficient on market perceptions are significant. • Trade openness,measures of liquidity and the number of sovereign default events are insignificant. • IMF programs do not have a positive effect on market access.

  12. panelanalysıs Swıtch ın year as one in which a country access the market after being unable to do so in the previous year year as one in which a country is is unable to access the markets after being able to access it the previous year Switch out

  13. We turn to a fixed effect logit regression that allows us to focus on those countries that experience years of access and years of exclusion over our sample period,with market access as the binary dependent variable • Only variables that show some variation over time are included,also we include time effects in some specifications to control for global conditions. • In addition, we use two default variable,IMF programs variables,lagged values of explanatory variables.

  14. Official versus Private flows • There might be a substitution between official and private capital flows • In order to investigate this possibility we computed the mean of official financial flows as percentage of GDP over time • Or different way; regressing the volume of private capital flows on official flows

  15. Statedependenceandrobustnessofthedependentvariable There are two reasons why a country that has had market access yesterday may be more likely to gain market access today First,countries might differ in certain characteristic that persist over time Second,it is possible that gaining market access at some point

  16. Sovereign default and typical periods of exclusion

  17. CONCLUSIONS There are six key findings of this study • Larger and wealthier countries borrow more and more often • Quality of policies and institutions matters substantially • Countries that are more vulnerable to schocks are less likely to be able to top international credit markets • Higher shares of FDI ınvestments in GDP are generally associated with higher access by sovereigns

  18. After the perceived quality of policies is controlled for,we do not find a clear effect of IMF programs • The probability of market access is not influced by the frequency of default events

  19. Cansu nur öztürk birinci thank you for attention 

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