CEU Electronic Theses and Dissertations, 2025
| Author | Battulga, Otgonzaya |
|---|---|
| Title | Does Fiscal Transparency Reduce Capital Flight During Crises in Emerging Economies? |
| Summary | This thesis examines whether fiscal transparency reduces sovereign risk premia during financial crises in emerging markets. Using data from 26 countries and two major crisis episodes (2011 and 2015), it analyzes changes in risk premia in relation to the Open Budget Index (OBI), controlling for macroeconomic conditions, credit ratings, capital account openness, and exchange rate regimes. Contrary to expectations, the findings show that higher transparency is associated with larger increases in risk premia during crises in the sample, likely due to faster market recognition of fiscal risks. This effect is absent in stable periods, possibly due to the higher baseline volatility and weaker institutional buffers typical of emerging markets, where transparency plays a different role than in advanced economies. A robustness check using the crisis-year OBI, published after the crises, confirms that investors respond to published transparency scores. The results suggest that transparency shapes the timing of market reactions, acting as a signal rather than a shield, and emphasizes its context-dependent role in investor behavior. |
| Supervisor | Romhányi, Balázs |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2025/battulga_otgo.pdf |
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