The Effect of Economic Freedoms Index Indicators on the Credit Ratings of Newly Industrialized Countries

Year 2022, Volume: 7 Issue: 4, 909 - 924, 31.12.2022

Gizem Vergili , Mehmet Sinan Çelik , Bahar Taş

https://doi.org/10.30784/epfad.1200927

Abstract

Sovereign credit ratings given by international credit rating agencies play an important role in determining the direction of fund flows among countries. Especially newly industrialized countries consistently need financing in order to make the development sustainable and to finance future investments. In this study, the factors affecting the credit ratings of newly industrialized countries are discussed. Foremost among these factors, the rule of law, the government size, the regulatory efficiency, and the open markets are considered as indicators of the economic freedom index. Moreover, the growth rate of gross domestic product and inflation rate are included into the model to control the macroeconomic and income levels of the countries. The parameters were estimated by applying Driscoll-Kraay Standard Errors analysis on the panel data set spanning from 1995 to 2021. As a result of the analysis, it is seen that all economic freedom index indicators except the open market indicator have a positive and significant effect on the credit ratings of countries. Consequently, the study argues that the newly industrialized countries' taking steps to improve their economic freedom will reduce the risk factors of the countries and thus achieve investment-grade credit ratings.

Keywords

Economic Freedom Index, Country Credit Ratings, Panel Data Analysis

Ekonomik Özgürlükler İndeks Göstergelerinin Yeni Sanayileşen Ülkelerin Kredi Notları Üzerine Etkisi

Abstract

Uluslararası kredi derecelendirme kuruluşlarının verdiği ülke kredi notları ülkeler arasındaki fon akımlarının yönünü belirlemede önemli bir görev üstlenmektedir. Özellikle yeni sanayileşen ülkeler gelişimi sürdürülebilir hale getirmek ve gelecekteki yatırımları finanse etmek amacıyla sürekli olarak finansman ihtiyacı duymaktadır. Bu çalışmada, yeni sanayileşen ülkelerin kredi notlarını etkileyen unsurlar ele alınmıştır. Bu unsurların başında ekonomik özgürlük indeks göstergesi olarak ele aldığımız hukukun üstünlüğü, devletin büyüklüğü, mevzuat yeterliliği ve serbest piyasa değişkenleri gelmektedir. Ayrıca ülkelerin gelir düzeylerini kontrol etmek amacıyla gayri safi yurt içi hasılanın büyüme oranı ve makroekonomik düzeylerini kontrol etmek amacıyla enflasyon oranı modele dahil edilmiştir. 1995-2021 dönemine ait veriler kullanılarak hazırlanan panel veri seti üzerinde Driscoll-Kraay Standart Hatalar analizi uygulanarak parametreler tahmin edilmiştir. Yaptığımız analiz sonucunda serbest piyasa göstergesi dışındaki tüm ekonomik özgürlük indeks göstergelerinin ülkelerin kredi notları üzerinde pozitif ve anlamlı etkisi olduğu görülmektedir. Çalışma sonuçları, yeni sanayileşen ülkelerin ekonomik özgürlük unsurlarını iyileştirici hamleler yapmasının ülkelerin risk faktörlerinin düşmesine böylece yatırım yapılabilir ülke kredi notlarına ulaşmasına sağlayacağını öne sürmektedir.

Keywords

Ekonomik Özgürlük İndeksi, Ülke Kredi Notları, Panel Veri Analizi

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