Financial openness, domestic financial development and credit ratings

This article shows that financial openness significantly affects corporate and sovereign credit ratings and that the magnitude of this effect depends on the level of development of the domestic financial market. Issuers located in less financially developed economiesi stand to benefit the most from opening up their capital accounts, whereas the impact of this effect decreases as the level of development of the domestic capital market improves. •Financial openness significantly affects corporate and sovereign credit ratings.•The magnitude of the effect depends on the level of domestic financial development.•Less-financially-developed economies benefit the most from financial openness.