Does transparency pay? Evidence from IMF data transparency policy reforms and emerging market sovereign bond spreads

Sangyup Choi, Yuko Hashimoto

Research output: Contribution to journalArticle

1 Citation (Scopus)


Does an effort to enhance data transparency pay? We answer this question by analyzing the effect of the data transparency policy reforms, as reflected in subscriptions to the IMF's Data Standards Initiatives, namely, the Special Data Dissemination Standard (SDDS) and the General Data Dissemination System (GDDS), on the spreads of emerging market sovereign bonds. Employing a short-run event study with daily data, we convincingly show that market participants react to the transparency reform news positively. We then measure its medium-term effect, which is more relevant for economic decisions. By showing that the reform decision is largely independent of a country's macroeconomic development we mitigate endogeneity issues regarding a decision to adopt such reforms. On average, the adoption of the SDDS and GDDS lead to a 13% reduction in the spreads over one year, following such reforms. This finding is robust to various sensitivity tests, including careful consideration of overlapping events, controlling for additional variables, and a placebo test.

Original languageEnglish
Pages (from-to)171-190
Number of pages20
JournalJournal of International Money and Finance
Publication statusPublished - 2018 Nov 1


All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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