Provincial Credit Ratings in Canada
- Topics:
- Commercial Lending,
- Quantitative Analysis
- Tags:
- Bank Of Canada,
- Finance,
- Operational Accounting,
- Ratio,
- Variable
- Source:
- Bank of Canada
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Overview: The author estimates the relationship between the provincial credit ratings, as assessed by Standard & Poor's, and a number of economic variables, using the ordered probit methodology. All the variables in her estimation prove to be significant. In particular, she finds that downgrades take place at almost the same speed at different levels of the debt-to-GDP ratio, based on a pooled sample of nine provinces. The projections suggest that no further downgrades are likely for provinces whose policies result in only moderate increases or decreases in the debt-to-GDP ratio. Some provinces may be upgraded if they benefit from income growth or follow fiscal policies that result in a declining debt-to-GDP ratio or an improvement in other explanatory variables.
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Format: PDF | Size: 804KB | Date: Apr 1996 | Pages: 47
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