THE ANALYSIS OF ECONOMIC, FINANCIAL AND POLITICAL FACTORS EFFECTING THE CHANGES OF RATINGS ASSESSED BY THE CREDIT RATING AGENCIES: A SURVEY FOR TURKEY

Abstract

Credit rating agencies examine the credit risks of countries according to certain criteria and present the rating results with certain grading symbols. Because financial actors prefer countries and industries with high investment grades as per the given ratings, credit ratings become even more important for developing countries which require capital. This study conducts a logistic regression model separately for the three well-known Rating Agencies, namely Moody?s, S&P and Fitch, to determine the economic, financial and political parameters that have an influence on changes in credit ratings given to Turkey by those institutions, for the period of 2000-2014. The results of the analysis put forward that, the gross domestic product (GDP) and the political risk index (PRI) variables are equally significant for each of the three credit rating agencies; and in addition, the stock market return (SMR) and the current account balance (CAB) for S&P, the external debt (ED) and the unemployment rate (UM) for Moody?s; and the external debt (ED) and the real interest rates (RIR) for Fitch, are also determined to be significant in changes in credit ratings.