African countries and Sovereign Credit Ratings Economics Proposal (Research Proposal Sample)
The task was focising on the credit rating system used worldwide to rate the credit worthiness of varying countries. The debate was on the potential bias that may exsist in the process to ensure that some countries get less costly lines of credit. this proposal was a direct requestsource..
African countries and Sovereign Credit Ratings: An investigation into potential bias
Most African countries are generally credit rated as being highly speculative and having an unnecessarily high risk of default. As a result, credit to these African countries is tied to stringent terms and high interest rates. Most sovereign governments rely heavily on credit funding to promote various growth policies and credit ratings are also signals of the state of the economy for investors so these credit ratings are prime importance. There has been argument into the transparency of credit ratings. With speculation of preferential treatment of the developed community there is need to assess the fairness and transparency of the credit ratings in relation to developing countries. This research will adopt a panel data analysis to assess seven developing countries in African separately from seven developed countries. This is expected to aid in attaining more efficient and widened view.
The African continent has long since been perceived as a generally impoverished area of underdevelopment with a backward populace practicing Viking age farming practices (Schorr, 2011). Africa is well endowed with the largest concentration of natural resources ranging from oil, natural gas, diamonds, gold, platinum, uranium and silver. Initially its wealth was divided among countries like Britain, France, Germany, Italy and Spain between 1881 and 1914 and used to profit and develop other countries at the expense of African countries (Koponen, 1993; Settles, 1996). In modern day, growth and development of African countries rests partially on credit inflows and investment injections from the international community (Mercieca, 2010). Due to the globalization of financial markets, investment into the African markets is still hindered by low sovereign credit ratings with most African countries relegated to the proverbial “junk” status.
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