An Accumulation of International Reserves and External Debt: Evidence from Developing Countries

The main analytical contribution of this paper is to analyze the cost of the decision to jointly hold reserves and sovereign debt. By analyzing the impact of holding reserves and sovereign debt on sovereign credit ratings will provide the evidence of the costs of holding reserves and debt with respe...

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Main Authors: Siti Nurazira, Mohd Daud,, Jan M., Podivinsky,
Format: Article
Language:English
Published: Routledge Journals, Taylor & Francis Ltd 2015
Subjects:
Online Access:http://ddms.usim.edu.my/handle/123456789/8023
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spelling my.usim-80232015-12-31T03:07:27Z An Accumulation of International Reserves and External Debt: Evidence from Developing Countries Siti Nurazira, Mohd Daud, Jan M., Podivinsky, International Reserves External Debt Developing Economies Credit Risk The main analytical contribution of this paper is to analyze the cost of the decision to jointly hold reserves and sovereign debt. By analyzing the impact of holding reserves and sovereign debt on sovereign credit ratings will provide the evidence of the costs of holding reserves and debt with respect to credit risk. It is found that the positive effect of accumulation reserves that aims to improve sovereign ratings has been crowding-out by the negative effect of accumulation external debt which resulted in a net negative effect. As such, it is suggested that countries reduce their sovereign debt in order to maintain a good credit risk position while holds international reserves at the optimal level of 3.67 in a month of imports which is slightly higher than the conventional rule. 2015-05-14T07:49:02Z 2015-05-14T07:49:02Z 2011 Article 1226-508X http://ddms.usim.edu.my/handle/123456789/8023 en Routledge Journals, Taylor & Francis Ltd
institution Universiti Sains Islam Malaysia
building USIM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universit Sains Islam i Malaysia
content_source USIM Institutional Repository
url_provider http://ddms.usim.edu.my/
language English
topic International Reserves
External Debt
Developing Economies
Credit Risk
spellingShingle International Reserves
External Debt
Developing Economies
Credit Risk
Siti Nurazira, Mohd Daud,
Jan M., Podivinsky,
An Accumulation of International Reserves and External Debt: Evidence from Developing Countries
description The main analytical contribution of this paper is to analyze the cost of the decision to jointly hold reserves and sovereign debt. By analyzing the impact of holding reserves and sovereign debt on sovereign credit ratings will provide the evidence of the costs of holding reserves and debt with respect to credit risk. It is found that the positive effect of accumulation reserves that aims to improve sovereign ratings has been crowding-out by the negative effect of accumulation external debt which resulted in a net negative effect. As such, it is suggested that countries reduce their sovereign debt in order to maintain a good credit risk position while holds international reserves at the optimal level of 3.67 in a month of imports which is slightly higher than the conventional rule.
format Article
author Siti Nurazira, Mohd Daud,
Jan M., Podivinsky,
author_facet Siti Nurazira, Mohd Daud,
Jan M., Podivinsky,
author_sort Siti Nurazira, Mohd Daud,
title An Accumulation of International Reserves and External Debt: Evidence from Developing Countries
title_short An Accumulation of International Reserves and External Debt: Evidence from Developing Countries
title_full An Accumulation of International Reserves and External Debt: Evidence from Developing Countries
title_fullStr An Accumulation of International Reserves and External Debt: Evidence from Developing Countries
title_full_unstemmed An Accumulation of International Reserves and External Debt: Evidence from Developing Countries
title_sort accumulation of international reserves and external debt: evidence from developing countries
publisher Routledge Journals, Taylor & Francis Ltd
publishDate 2015
url http://ddms.usim.edu.my/handle/123456789/8023
_version_ 1645152323452796928
score 13.214268