Debt to reserve ratio key indicator of country default: World Bank research
The ratio of debt to reserves is the best predictor of sovereign default, research published by the World Bank on 16 August finds.
Taking a sample of 46 emerging market countries, Luca Bandiera, Jesus Cuaresma and Gallina Vincelette, the paper's authors, apply Bayesian model averaging techniques to show that a country's level of indebtedness with respect to available reserves is the most relevant predictor of default.
Their analysis also shows that in countries with a debt to GDP ratio in excess
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