Delegating discipline: how indexes restructured the political economy of sovereign bond markets

Ben Cormier, Natalya Naqvi

Research output: Contribution to journalArticlepeer-review


Outside of the rich world, international financial markets are thought to discipline borrowing governments by monitoring political and economic characteristics. But increasingly, asset managers do not assess individual country risk/return profiles. They replicate benchmark indexes, delegating investment decisions to index providers. This has two effects. First, it relocates market discipline into the hands of index providers. Second, it alters the constraints sovereigns face when accessing bond markets, conditioning the relationship between a sovereign’s political-economic features and its ability to raise capital. Using a novel dataset of index inclusion and weights, we show country-specific factors traditionally associated with bond market access do not have the expected constraining effects on countries included in a major index, but do continue to affect excluded countries. Index investment has profoundly restructured debt markets by circumscribing the disciplinary link between country characteristics and capital allocation, with wide-ranging implications for the political economy of debt and finance.
Original languageEnglish
Pages (from-to)1501-1515
Number of pages15
JournalJournal of Politics
Issue number4
Early online date23 Aug 2023
Publication statusPublished - 31 Oct 2023


  • sovereign debt
  • bond indexes
  • market discipline
  • financial globalization
  • international political economy


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