Predicting Countries Credit Ratings with Institutional Performance

Abstract

In order to widen the vision and to visualize the impact of the institutions on not only economic growth as traditionally used but also on the Credit Ratings of countries, this experiment studies the correlation between these two attributes. In this paper, I show how we can find the relationship between the credit ratings of countries and the performance of their institutions. In this study, I used a data set of countries and indicators of their performance on institutional indicators, such as property rights, judicial effectiveness ...etc. And I conclude at the end that there is a strong correlation between an effective institution and a higher rating in credits report that is done by the major firms in this area. Also, I mention the limitation of this experiment in the matter of credibility.