A study of sovereign risk and debt defaults: evidence from Asian economies Online publication date: Mon, 18-Dec-2023
by Moid U. Ahmad; Talla M. Al-Deehani
International Journal of Economic Policy in Emerging Economies (IJEPEE), Vol. 18, No. 2, 2023
Abstract: Sovereign defaults are becoming increasingly common, raising questions about fiscal management and debt management by governments across the globe. This paper attempts to investigate country defaults in countries across Asia based on the level of their debt against income. A total of nine variables for 34 countries, across Asia, were studied for the time period 2015-2017, where binary and multinomial logistic regression was used as a primary technique of analysis. Exploratory factor analysis for data reduction and qualitative analysis is also done in the study. Out of total 34 sample countries, 14 (41%) were found to default based on 2017 data of Debt/GDP ratio. One of the significant findings was that Debt/GDP ratio is negatively correlated with GDP growth rate and that country debt defaults can be explained by two factors: savings and growth. The study is expected to provide inputs to policymakers, managers and bankers for effective distress and debt default management at country level.
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