Trust Us to Repay: Social Trust, Long-Term Interest Rates, and Sovereign Credit Ratings
(2021) In Journal of Money, Credit and Banking 53(5).- Abstract
- This paper asks whether the sensitivity of market long-term interest rates and credit ratings is associated with cross-country differences in social trust. We note a number of theoretical mechanisms that suggest that macroeconomic shocks are more likely to be effectively dealt with in higher-trust societies. A set of panel estimates across middle- and high-income countries reveals that interest rates and credit ratings are substantially more sensitive to inflation and growth problems in low-trust countries. This finding sheds light on the differential market reactions to macroeconomic problems in seemingly comparable countries.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/2d2c675e-054b-4b91-ae59-e6d4cebed39a
- author
- Bergh, Andreas LU and Christian, Bjørnskov
- organization
- publishing date
- 2021-05-06
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- social trust, credit ratings
- in
- Journal of Money, Credit and Banking
- volume
- 53
- issue
- 5
- publisher
- Wiley-Blackwell
- external identifiers
-
- scopus:85105363205
- ISSN
- 1538-4616
- DOI
- 10.1111/jmcb.12812
- language
- English
- LU publication?
- yes
- id
- 2d2c675e-054b-4b91-ae59-e6d4cebed39a
- alternative location
- https://onlinelibrary.wiley.com/doi/abs/10.1111/jmcb.12812
- date added to LUP
- 2017-11-13 21:14:55
- date last changed
- 2022-04-25 03:46:52
@article{2d2c675e-054b-4b91-ae59-e6d4cebed39a,
abstract = {{This paper asks whether the sensitivity of market long-term interest rates and credit ratings is associated with cross-country differences in social trust. We note a number of theoretical mechanisms that suggest that macroeconomic shocks are more likely to be effectively dealt with in higher-trust societies. A set of panel estimates across middle- and high-income countries reveals that interest rates and credit ratings are substantially more sensitive to inflation and growth problems in low-trust countries. This finding sheds light on the differential market reactions to macroeconomic problems in seemingly comparable countries.}},
author = {{Bergh, Andreas and Christian, Bjørnskov}},
issn = {{1538-4616}},
keywords = {{social trust; credit ratings}},
language = {{eng}},
month = {{05}},
number = {{5}},
publisher = {{Wiley-Blackwell}},
series = {{Journal of Money, Credit and Banking}},
title = {{Trust Us to Repay: Social Trust, Long-Term Interest Rates, and Sovereign Credit Ratings}},
url = {{http://dx.doi.org/10.1111/jmcb.12812}},
doi = {{10.1111/jmcb.12812}},
volume = {{53}},
year = {{2021}},
}