📚 How Leaders and Defaults Were Tracked:

Sovereign default is framed here as a political decision rather than only an economic outcome. Prior research emphasizes economic causes, domestic constraints, or international reputation; this analysis shifts focus to who holds executive power. The core claim: leaders who assume office under irregular circumstances are more likely to trigger sovereign default.

📊 What the Study Analyzed:

• A historical dataset linking sovereign defaults and leadership transitions from 1875 to 2015.
• Statistical models comparing regular and irregular leadership changes and their relationship to default onset.
• Robustness checks across various model specifications to ensure findings are not model-dependent.

🔎 Why Irregular Leaders Are More Likely To Default:

• Elevated turnover risk: Irregular leaders face heightened vulnerability to being removed, which encourages prioritizing short-term gains from default over long-term benefits of repayment.
• Obfuscation of responsibility: Irregular regime transitions provide a means to hide accountability, thereby reducing the reputational costs that normally deter default.

📈 Key Findings:

• Irregular leadership change substantially raises the probability of default onset.
• Across multiple model specifications, irregular leadership change increases the odds of default onset by over 300 percent.
• Results are consistent across the historical sample and robustness tests, supporting the claim that leadership origins matter for sovereign credit decisions.

💡 Why This Matters:

These findings reframe sovereign default as a consequence of leader-level politics as well as macroeconomic factors. The study suggests that the manner in which leaders assume power is a salient predictor of credit risk and should be considered alongside economic indicators when assessing sovereign default vulnerability.