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Why Do Some Countries Default More Often Than Others? The Role of Institutions

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dc.contributor.authorQian, Rong
dc.date.accessioned2012-03-19T17:29:40Z
dc.date.available2012-03-19T17:29:40Z
dc.date.issued2012-03-01
dc.description.abstractThis paper examines how a country's weak institutions and polarized government can affect the likelihood of its default on sovereign debt. Using a data set of 90 countries, it shows that strong institutions are associated with fewer sovereign default crises. In addition, when institutions are weak, a more polarized government tends to default more often. To explain these findings, the author develops a model showing the dynamics between the quality of institutions, the level of government polarization and sovereign default risk. Countries default more often when they lack rules and strong institutions to curb the influence of powerful groups on government policies. That is because in a polarized government, each powerful group makes decisions without considering the impact on other groups. Simulations of the model show that more than half the cross-country variation in sovereign default frequencies can be explained by institutional quality and the degree of government polarization observed in the data.en
dc.identifierhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120312132447
dc.identifier.doi10.1596/1813-9450-5993
dc.identifier.urihttps://hdl.handle.net/10986/3282
dc.languageEnglish
dc.relation.ispartofseriesPolicy Research working paper ; no. WPS 5993
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCESS TO CREDIT
dc.subjectADVANCED ECONOMIES
dc.subjectAGGREGATE COST
dc.subjectAGGREGATE DEBT
dc.subjectAMOUNT OF DEBT
dc.subjectARREARS
dc.subjectASSETS
dc.subjectAVERAGE DEBT
dc.subjectBAILOUTS
dc.subjectBANK POLICY
dc.subjectBANKING CRISES
dc.subjectBARGAINING POWER
dc.subjectBARGAINING POWERS
dc.subjectBOND
dc.subjectBOND PRICE
dc.subjectBOND PRICES
dc.subjectBORROWER
dc.subjectBORROWING COUNTRY
dc.subjectBUDGET CONSTRAINT
dc.subjectBUDGET CONSTRAINTS
dc.subjectBUREAUCRATIC QUALITY
dc.subjectBUSINESS CYCLE
dc.subjectCAPITAL FLOWS
dc.subjectCAPITAL MARKET
dc.subjectCASE OF DEFAULT
dc.subjectCENTRAL BANK
dc.subjectCENTRAL BANK INDEPENDENCE
dc.subjectCLAIM
dc.subjectCONSUMPTION SMOOTHING
dc.subjectCORRUPTION
dc.subjectCOST STRUCTURE
dc.subjectCOUNTRY RISK
dc.subjectCREDIBILITY
dc.subjectCREDIT MARKET
dc.subjectCREDITORS
dc.subjectCURRENT ACCOUNT
dc.subjectDEBT CONTRACTS
dc.subjectDEBT CRISES
dc.subjectDEBT CRISIS
dc.subjectDEBT LEVEL
dc.subjectDEBT OBLIGATIONS
dc.subjectDEBT POLICIES
dc.subjectDEBT POLICY
dc.subjectDEBT REPAYMENT
dc.subjectDEBTS
dc.subjectDEFAULT COST
dc.subjectDEFAULT COSTS
dc.subjectDEFAULT LOSS
dc.subjectDEFAULT PENALTY
dc.subjectDEFAULT PROBABILITIES
dc.subjectDEFAULT PROBABILITY
dc.subjectDEFAULT RISK
dc.subjectDEFAULTER
dc.subjectDEFAULTERS
dc.subjectDEFICITS
dc.subjectDEMOCRACIES
dc.subjectDEPENDENT
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPMENT BANK
dc.subjectDEVELOPMENT ECONOMICS
dc.subjectDEVELOPMENT POLICY
dc.subjectDISCOUNT BONDS
dc.subjectDUMMY VARIABLE
dc.subjectDURABLE
dc.subjectECONOMIC ACTIVITY
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC POLICY
dc.subjectEMERGING ECONOMIES
dc.subjectEMPLOYER
dc.subjectEQUILIBRIUM
dc.subjectETHNIC GROUPS
dc.subjectEVENT OF DEFAULT
dc.subjectEXCLUSION
dc.subjectEXPENDITURE
dc.subjectEXPENDITURES
dc.subjectEXPROPRIATION
dc.subjectEXPROPRIATION RISK
dc.subjectEXTERNAL BORROWING
dc.subjectEXTERNAL DEBT
dc.subjectEXTERNAL SHOCKS
dc.subjectFEDERAL RESERVE
dc.subjectFEDERAL RESERVE BANK
dc.subjectFINANCIAL AFFAIRS
dc.subjectFINANCIAL CRISES
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL RELATIONSHIP
dc.subjectFINANCING COST
dc.subjectFINANCING COSTS
dc.subjectFISCAL DECENTRALIZATION
dc.subjectFISCAL DEFICIT
dc.subjectFISCAL DEFICITS
dc.subjectFISCAL DISCIPLINE
dc.subjectFISCAL POLICIES
dc.subjectFISCAL POLICY
dc.subjectFISCAL REFORMS
dc.subjectFOREIGN INVESTORS
dc.subjectFOREIGN LENDERS
dc.subjectFULL REPAYMENT
dc.subjectFUNCTIONAL FORMS
dc.subjectGDP PER CAPITA
dc.subjectGINI COEFFICIENT
dc.subjectGLOBAL DEVELOPMENT FINANCE
dc.subjectGOVERNANCE INDICATORS
dc.subjectGOVERNMENT DEBT
dc.subjectGOVERNMENT DEFAULT
dc.subjectGOVERNMENT EXPENDITURE
dc.subjectGOVERNMENT POLICIES
dc.subjectGOVERNMENT SPENDING
dc.subjectHARD BUDGET
dc.subjectHIGH DEBT
dc.subjectINCOME
dc.subjectINCOME INEQUALITY
dc.subjectINCOME LEVEL
dc.subjectINCOMES
dc.subjectINDUSTRIALIZATION
dc.subjectINEFFICIENCY
dc.subjectINFLATION
dc.subjectINSTITUTIONAL ARRANGEMENTS
dc.subjectINSTITUTIONAL BARRIERS
dc.subjectINSTITUTIONAL CONSTRAINTS
dc.subjectINSTITUTIONAL ENVIRONMENT
dc.subjectINTEREST PAYMENT
dc.subjectINTEREST RATES
dc.subjectINTERGOVERNMENTAL TRANSFERS
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL CAPITAL
dc.subjectINTERNATIONAL CAPITAL MARKET
dc.subjectINTERNATIONAL CAPITAL MARKETS
dc.subjectINTERNATIONAL CREDIT
dc.subjectINTERNATIONAL DEVELOPMENT
dc.subjectINTERNATIONAL ECONOMICS
dc.subjectINTERNATIONAL INVESTORS
dc.subjectJURISDICTIONS
dc.subjectLABOR UNIONS
dc.subjectLEGAL FRAMEWORK
dc.subjectLENDER
dc.subjectLENDERS
dc.subjectLEVEL OF DEBT
dc.subjectLEVELS OF DEBT
dc.subjectLEVY
dc.subjectLIQUIDATION
dc.subjectLOCAL GOVERNMENTS
dc.subjectLOW-INCOME COUNTRIES
dc.subjectMACROECONOMIC POLICIES
dc.subjectMACROECONOMICS
dc.subjectMARGINAL COST
dc.subjectMARKET FOR BONDS
dc.subjectMARKET MECHANISMS
dc.subjectMONETARY POLICY
dc.subjectNATIONAL INCOME
dc.subjectNEGATIVE EXTERNALITIES
dc.subjectNEGATIVE EXTERNALITY
dc.subjectNEGOTIATIONS
dc.subjectOPEN ECONOMY
dc.subjectOPTIMIZATION
dc.subjectORIGINAL CONTRACT
dc.subjectORIGINAL OBLIGATION
dc.subjectOUTPUT
dc.subjectOUTPUT LOSS
dc.subjectPARTICULAR COUNTRY
dc.subjectPOLITICAL ECONOMY
dc.subjectPOLITICAL REGIME
dc.subjectPOLITICAL SYSTEM
dc.subjectPROBABILITY OF DEFAULT
dc.subjectPROPERTY RIGHTS
dc.subjectPUBLIC DEBT
dc.subjectPUBLIC DEFICIT
dc.subjectPUBLIC SPENDING
dc.subjectREAL GDP
dc.subjectREAL INTEREST
dc.subjectREAL INTEREST RATE
dc.subjectRECESSIONS
dc.subjectREGRESSION ANALYSIS
dc.subjectREMEDIES
dc.subjectRENEGOTIATION
dc.subjectRENEGOTIATION PROCESS
dc.subjectREPAYMENT
dc.subjectREPUDIATION
dc.subjectREPUTATION
dc.subjectRESTRUCTURING OF DEBT
dc.subjectRISK AVERSION
dc.subjectRISK NEUTRAL
dc.subjectRISK OF DEFAULT
dc.subjectRISK PREMIUM
dc.subjectRULE OF LAW
dc.subjectSINGLE DEBT
dc.subjectSOCIAL SECURITY
dc.subjectSOFT BUDGET CONSTRAINTS
dc.subjectSOURCE OF INCOME
dc.subjectSOVEREIGN BONDS
dc.subjectSOVEREIGN DEBT
dc.subjectSOVEREIGN DEFAULT
dc.subjectSOVEREIGN DEFAULTS
dc.subjectSTATE ARREARS
dc.subjectSTATE DEBT
dc.subjectSTATE DEBTS
dc.subjectSYSTEMIC BANKING CRISES
dc.subjectTAX
dc.subjectTAX BURDEN
dc.subjectTAX REVENUE
dc.subjectTAX REVENUES
dc.subjectTOTAL DEBT
dc.subjectTREASURY
dc.subjectUNDERESTIMATES
dc.subjectUTILITY FUNCTION
dc.subjectVOLATILITIES
dc.subjectVOLATILITY
dc.subjectVOTERS
dc.subjectWORLD DEVELOPMENT INDICATOR
dc.titleWhy Do Some Countries Default More Often Than Others? The Role of Institutionsen
dspace.entity.typePublication
okr.crossref.titleWhy Do Some Countries Default More Often than Others? The Role of Institutions
okr.date.disclosure2012-03-01
okr.date.doiregistration2025-04-10T11:02:47.032004Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120312132447
okr.guid433911468331194979
okr.identifier.doi10.1596/1813-9450-5993
okr.identifier.externaldocumentum000158349_20120312132447
okr.identifier.internaldocumentum15924947
okr.identifier.reportWPS5993
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/03/12/000158349_20120312132447/Rendered/PDF/WPS5993.pdfen
okr.region.administrativeThe World Region
okr.region.administrativeThe World Region
okr.sectorFinance :: General finance sector
okr.unitDevelopment Research Group (DECRG)
okr.unitDECRG: Macroeconomics & Growth (DECMG)
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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