How Do Political Factors Shape the Bank Risk-Sovereign Risk Nexus in Emerging Markets?

Konferenzbeitrag

This paper studies the role of conditioning political factors for determining the impact of banking crises on sovereign bond yield spreads for a sample of 33 emerging economies in the period 1995-2010. Accounting for the endogenous nature of banking crisis outbreaks, I find that sovereign bond yield spreads increase, on average, by 13 to 17 percentage points during banking crisis episodes. I find that the adverse impact of banking crises on sovereign solvency is less pronounced (or even insignificant) for countries run by powerful and effective governments, low levels of public debt, and a high degree of political stability.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Sovereign risk revisited: construction and use of early-warning systems ; No. A06-V1

Classification and Topics

• Classification: Wirtschaft ; Financial Crises ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Asset Pricing; Trading Volume; Bond Interest Rates

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Eichler, Stefan
• Event: Veröffentlichung
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/112877