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Elements of Sovereign-Debt Default in the MENA Region

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  • Nicholas Bitar

Abstract

In the past half-century, the MENA region has witnessed several political uproars, varying between internal instability and conflict to external assaults and disputes. Studies conducted on developing countries have shown that political risk factors have, one way or another, rushed the governments’ decision to default on their debt. The purpose of this study is to examine the significance of the determinants of sovereign debt default. The aim here is to find the correct set of independent variables, whose effect is significant and are agreed upon generally in the literature. The empirical study is a panel data that samples 35 years 1984-2018 for all MENA countries. From the political perspective, I find that corruption and cohesion are the factors that stand behind sovereign debt default. From the economic standpoint, inflation and debt to GDP ratio are significant and positively related indicators to sovereign debt defaults. Whereas, trade openness is significant and negatively related. Moreover, the results reveal that GDP growth is insignificant, this finding contradicts the literature of the determinants of sovereign debt.

Suggested Citation

  • Nicholas Bitar, 2020. "Elements of Sovereign-Debt Default in the MENA Region," Asian Social Science, Canadian Center of Science and Education, vol. 16(12), pages 1-93, December.
    • Handle: RePEc:ibn:assjnl:v:16:y:2020:i:12:p:93
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    References listed on IDEAS

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    1. Manasse, Paolo & Roubini, Nouriel, 2009. ""Rules of thumb" for sovereign debt crises," Journal of International Economics, Elsevier, vol. 78(2), pages 192-205, July.
    2. Feder, Gershon & Just, Richard & Ross, Knud, 1981. "Projecting Debt Servicing Capacity of Developing Countries," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 16(5), pages 651-669, December.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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