2004 Fiscal Year Final Research Report Summary
Determinant Factors of Fund Procurement Costs by Developing Countries in International Capital Markets
| Project/Area Number |
15530206
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Public finance/Monetary economics
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| Research Institution | HOKKAIDO UNIVERSITY |
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Principal Investigator |
INOUE Hisashi Hokkaido University, Grad.School of Economics & Business Administration, Professor, 大学院・経済学研究科, 教授 (00261272)
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| Project Period (FY) |
2003 – 2004
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| Keywords | International Finance / Country Risk |
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| Research Abstract |
Major finding of the research are as follows :
(1)Determinant factors for the yield of bonds issued by LDCs' sovereignties are explicitly different from the determinants for the interest rate spread on the syndicated bank loans borrowed by LDCs.
(2)No statistical significance can be found as a determinant factor for bond yield or loan spread in the amount of fund raised by LDCs and other terms of borrowing such as maturities of borrowing.
(3)Macro-economic variables indicate statistical significance as critical determinants in relation with bonds' yield spread ; whereas no such significance can be found with loan spread.
(4)From the view point of (yield) spread and the amounts of fund received, the capital markets for sovereign bond, other public bond, private bond and syndicated loan seems to be independent each other.
(5)In light with debt rescheduling experience for the countries, investors for bonds pay less attention than international bankers.
(6)Geographical factor is a sort of determinants for borrowing. The case of Latin American countries are demanded to pay higher risk premium than other countries in other regions.
(7)By view of GDP per capita level, risk premium for lower income countries is reasonably lower in bond markets. The relationship is unclear in bank loan market.
(8)Country risk appraisals by credit rating agencies including the Euromoney and others are reflected in bond yield and bank loan spreads.
(9)To enjoy the favorable terms of borrowing the borrowing countries have to be success in combating the inflation, balancing the maturity composition of the countries debt, and controlling the debt-service ratio.
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