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This paper aims to analyze thoroughly all of the sources of research used to develop the money laundering (ML) and terrorist financing (TF) low-risk rating, a rating attained by Norway according to the Basel Institute of Governance, and determine the reasons why Norway is one of only two countries in the world according to the 2012 report, with the other being Estonia, to gain an overall low-risk ML and TF rating.

The differences between the USA and Norway which has obtained a low-risk ranking, were compared and contrasted.

Beginning with the Basel Institute Rating index as a legitimate source for use in assessing anti-money-laundering (AML)/TF risk, and the amount of documentation used in the index’s methodology, it has been proven that the low-risk rating Norway has received is well deserved, and that the US rating of medium risk is also deserved for the time the report was published. Achieving a low-risk rating is not as ambiguous as recently thought and neither is its application on a global scale.

The paper identifies practical areas of improvement and concerns in addressing the overall issue of ML and terrorist financing.

The damage humans caused to the environment post the industrial revolution fostered developing sustainability-rating systems – a number of evaluation instruments that focus on various factors to evaluate buildings and small-scale urban developments. Nevertheless, no buildings are certified in Bahrain, the environmentally challenged country in the Arabian Gulf. The paper aims to discuss these issues.

This study assesses 11 sustainability-rating systems: LEED, Green Globes, BREEAM, DGNB, SBTool, WELL, CASBEE, Green Star, HQE, GSAS and the Pearl Rating System (PRS). These were selected because of their international applicability, popularity and importance. The study adopts a system of criteria using a comparative review and cross-comparisons to draw conclusions on the compliance of the selected systems to the Bahraini context and assesses the need and importance of a customised sustainability-rating tool.

The study concluded that LEED is the most comprehensive, international and versatile sustainability-rating system. It is also the most popular. Nevertheless, the PRS is the most relevant to the Bahraini context and is the easiest to access.

This paper provides a deep understanding of sustainability-rating tools and introduces a methodology of comparison that can be used as a reference when choosing between tools.

This chapter is a study of the impact of environmental, social, and governance (ESG) issues on credit rating in India. It will help issuers, investors, and other market participants understand rating agencies' approach to incorporating the sustainability-related factors in its analysis. This will provide an overall perspective on the considerations that are usually the most important. Under environment considerations, climate change, waste recycling, air pollutants, and natural capital sustainability can be important factors. Social considerations are becoming more and more important among investors and consumers and are raising awareness about prosperous and failing communities. Moreover, COVID-19 pandemic has further highlighted the need for redirecting capital flows toward sustainable activities, making our economy and society more resilient against shocks. Governance factors primarily involve the corporate governance practices prevalent in the entity reflecting the different rights and responsibilities among its different stakeholders management, board of directors, employees, lenders, shareholders, customers, and suppliers. It also encompasses the corporate's business conduct and practices related to transparency and disclosure. This chapter will focus on the contemporary issues of including ESG in credit rating and what are the probable impacts of doing the same.

With favorable rating, companies can access international debt market easily. Moreover a favorable sovereign rating is beneficial for the overall economy of a country as better rating enables the government of the country to access the international debt market. Even capital allocation by foreign institutional investors increases which is beneficial for the equity market too.

This study is a comparative analysis of the magnitude of economic growth as a key determinant of long-term foreign currency sovereign credit ratings in 30 countries in Africa, Europe, Asia and Latin America from 2010 to 2018.

The analysis applies the fixed effects (FE) and random effects (RE) panel least squares (PLS) models.

The authors find that the magnitude economic coefficients are marginally small for African countries compared to other developing countries in Asia, Europe and Latin America. Results of the probit and logit binary estimation models show positive coefficients for economic growth sub-factors for non-African countries (developing and developed) compared to negative coefficients for African countries.

These findings mean that, an increase in economic growth in Africa does not significantly increase the likelihood that sovereign credit ratings will be upgraded. This implies that there is lack of uniformity in the application of the economic growth determinant despite the claims of a consistent framework by rating agencies. Thus, macroeconomic factors are relatively less important in determining country's risk profile in Africa than in other developing and developed countries.

First, studies that investigate the accuracy of sovereign credit rating indicators and risk factors in Africa are rare. This study is a key literature at the time when the majority of African countries are exploring the window of sovereign bonds as an alternative funding model to the traditional concessionary borrowings from multilateral institutions. On the other hand, the persistent poor rating is driving the cost of sovereign bonds to unreasonably high levels, invariably threatening their hopes of diversifying funding options. Second, there is criticism that the rating assessments of the credit rating agencies are biased in favour of developed countries and there is a gap in literature on studies that explore the whether the credit rating agencies are biased against African countries. This paper thus explores the rationale behind the African Union Decision Assembly/AU/Dec.631 (XXVIII) adopted by the 28th Ordinary Session of the African Union held in Addis Ababa, Ethiopia in January 2017 (African Union, 2017), directing its specialized governance agency, the African Peer Review Mechanism (APRM), to provide support to its Member States in the field of international credit rating agencies. The Assembly of African Heads of State and Government highlight that African countries are facing the challenges of credit downgrades despite an average positive economic growth. Lastly, the paper makes contribution to the argument that the majority of African countries are unfairly rated by international credit rating agencies, raising a discussion of the possibility of establishing a Pan-African credit rating institution.

Relative risk ratings measure the degree by which a country’s sovereign rating is better or worse than other countries (Basu et al., 2013). However, the literature on the impacts of sovereign ratings on capital flows has not covered the role of relative risk ratings. This paper aims to examine the effect of relative risk ratings on private capital flows to emerging and frontier market economies is filled. In the analysis, the effect of relative risk ratings to that of absolute sovereign ratings in influencing private capital flows are compared.

This paper examines the influence of sovereign credit ratings and relative risk ratings on private capital flows to 26 emerging and frontier market economies using quarterly data for a 20-year period between 1998 and 2017. A dynamic panel regression model is used to estimate the relationship between ratings and capital flows after controlling for other factors that can influence capital flows such as growth and interest rate differentials and global risk conditions.

The analysis finds that while absolute sovereign credit ratings were an important determinant of net capital inflows prior to the global financial crisis in 2008, the influence of relative risk ratings increased in the post-crisis period. The post-crisis effect of relative ratings appears to be driven mostly by portfolio flows. The main results are robust to an alternate measure of capital flows (gross capital flows instead of net capital flows), to the use of fixed gross domestic product weights in calculating relative risk ratings and to the potential endogeneity of absolute and relative ratings.

This study advances the literature on being the first attempt to understand the impact of relative risk ratings on capital flows and also comparing the impact of absolute sovereign ratings and relative risk ratings on capital flows in the pre- and post-global financial crisis periods. The findings imply that emerging and frontier markets need to pay greater attention to their relative economic performance and not just their sovereign ratings.

Credit rating agencies (CRAs) are perceived as highly influential in the financial system since their announcements can affect several players in the financial markets, from big private financial and non-financial companies and their financial markets experts to sovereign states. In this sense, this study investigates whether sovereign credit news issued by CRAs (measured by comprehensive credit rating (CCR) variables) affect the uncertainties about the exchange rate in the future (captured by the disagreement about exchange rate expectations). The study is relevant once there is evidence indicating that CRAs' assessments are responsible for affecting international capital flows and, thus, sovereign rating changes can affect the expectations formation process regarding the exchange rate. In addition, there is evidence indicating that the disagreement about exchange rate expectations affects the disagreement about inflation expectations, which brings consequences to policymakers.

The dependent variables are the disagreement in expectations about the Brazilian exchange rate for different forecast horizons, 12, 24 and 36 months ahead and the first principal component of theses series. On the other hand, the CCR variables are built upon the long-term foreign-currency Brazilian bonds ratings, outlooks and credit watches provided by the main CRAs. Estimates are obtained using ordinary least squares (OLS) and generalized method of moments (GMM); a dynamic analysis is performed using vector-autoregressive (VAR) through impulse-response functions.

Negative (positive) sovereign credit news, given by a rating downgrade (upgrade) and/or a negative (positive) outlook/watch status, increase (decrease) the disagreement about exchange rate expectations. This result holds for all disagreement and CCR variables.

The study brings practical implications to both private agents (mainly financial market experts) and policymakers. An important practical implication of the study concerns the ability of CRAs to affect the expectations formation process of financial market experts regarding the future behavior of the exchange rate. When a CRA issues a signal of improvement in a country's sovereign rating, this signal reflects the perception of improvement in macroeconomic fundamentals and reduction of uncertainties about the country's ability to honor its financial obligations, which therefore, facilitates the expectations formation process, causing a reduction in the disagreement about the exchange rate expectations. With respect to the consequences for policymakers, they will have more difficulty in guiding expectations in a country with a worse sovereign risk rating, where agents have difficulties in forming expectations and the disagreement in expectations is greater.

The study is the first to analyze the impact of CRAs' announcements on the disagreement about exchange rate expectations. Moreover, it connects the literature that investigates the effects of sovereign credit news on the economy with the literature that examines the main determinants of disagreement in expectations about macroeconomic variables.

This paper investigates the extent to which country risk ratings influence the inflow of foreign direct investment (FDI). Using International Monetary Fund (IMF) data from over 100 countries and Euromoney’s country risk ratings over a ten‐year period, this study finds that country risk ratings have a significant influence on FDI. This effect is stronger for US FDI. We also analyze the relative importance of the individual components of the country risk index.

This chapter differentiates the effect of solicited credit ratings (SCRs) and unsolicited credit ratings (UCRs) on bank leverage decision before and after the credit rating change. We find that banks with UCRs issue less debt relative to equity when the credit rating changes are approaching. Such findings are also prominent when bank credit rating moves from investment grade to speculative grade. After credit rating upgrades (downgrades), banks with unsolicited (solicited) credit ratings are inclined to issue more (less) debt relative to equity than those with solicited (unsolicited) credit ratings. We conclude that SCR and UCR changes lead to significantly different effects on bank leverage decision.

The purpose of this paper is to build a neural network system to predict corporate credit rating in Jordanian non-financial firms, using 19 different financial characteristics such as profitability, leverage ratios, liquidity, bankruptcy, and sales performance.

The study adopts two neural network techniques namely, Kohonen network and Back Propagation Neural Network (BPNN). Our sample includes the manufacturing firms that have provided the required financial information for the period from 2000 to 2007.

BPNN has successfully predicted firms with high performance gaining A rating and the bankrupted firms with D rating for the period from 2005 to 2007.

This study is the first study to investigate credit rating in Jordan using Neural Network technique.

The purpose of this paper is to show that state economic policies, in addition to state economic performance, impact state bond ratings.

Using a sample of 39 states over the period 1998‐2008, regression analysis is employed to determine whether various measures of economic freedom contribute to state bond ratings.

After controlling for common factors such as state per‐capita income, unemployment, the ratio of tax revenue to income, state debt as a percentage of government revenue, and public corruption, results suggest that greater economic freedom is associated with higher bond ratings. For example, a one standard deviation increase in Area 2 of the Economic Freedom of North America index (Takings and Taxation) would be associated with a 0.36 increase in Moody's bond rating for that state, which translates to approximately a $247 lower cost per million dollars of debt.

This study contributes to the empirical state bond rating literature by highlighting that states with greater economic freedom have higher bond ratings and, therefore, pay lower borrowing costs than their counterparts with lower economic freedom index scores.