초록 열기/닫기 버튼
Financial theoreticians have two diametrically opposed opinions on whether high volatility ofindicators ofa sovereigns debt service capacity (DSC) will affect its DSC or not. This paper summarizes these opinions into sev- eral hypotheses and examines them empirically. Data ofdebt service ratio and DSC of105 countries between 1985- 1992 were collected and volatility ofeach countrys debt service ratios are computed. Stepwise logistics regression analyses and multivariate Chi-square tests are conducted to test the relationship between the volatility ofa countrys DSC indicators and its DSC. Evidence has been found that generally DSC indicators volatility is not a significant factor affecting a sovereigns DSC. This is probably because the major concern ofa sovereign is the reputation ofthe nation so that the country can maintain a stable source offuture international loans. When a borrowing country encounters financial shocks, it often adopts austerity policy and will default its loan only as a last resort. Ho wever, among medium-income countries, DSC indicators volatility does affect a sovereign s DSC. This is probably because the governments in those countries are politically weak and cannot cutback imports to lower the nations consump- tion level and make voters unhappy.
