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The relationship between importGDP and CDS spreads had conducted by Sand 2012, the result shows that the CDS spreads is
increase along with the increasing on the importGDP variable.
5. Current Account Balance
The balance of payments consist of the current account and capital account. In this study I focus on the current account. Current account
represents a summary of the flow of funds between one specified country and all other countries due to the purchases of goods or services, or the
provision of income on financial assets Madura, 2010:27. Madura 2010:27-28 describes the main components of the current account, they
are payments for: a. Merchandise goods and services : merchandise exports and imports
represent tangible assets, while the service exports and imports represent tourism and other services, such as insurance.
b. Factor income payments : income interest and dividend payments received by investors on foreign investment in financial assets.
c. Transfer payments : represented by aid and grants. According to Case,et. al, 2009:402, the balance of payments is the
record of a country’s transactions in goods, services, and assets with the other countries, also the record of a country’s sources supply and uses
demand of foreign exchange. Meanwile the current account balance is
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net exports of goods + net exports on services + net invetment income + net transfer payments.
The relationship between current account balance and Credit Default Swap spreads had conducted by Sand 2012, the result shows that the
higher current account balance led to the lower CDS spreads.
F. Previous Research
Research regarding the effect of macroeconomic variables toward Credit Default Swap spread had conducted by some of the researchers. The result can
be elaborated as follows: 1.
Alexander and Andreas β008 had conducted a research titled “Regime dependent determinants of credit default swap spreads”. In their research
Alexander used daily quotes of iTraxx Europe CDS indices and restrict the analysis to indices with a maturity of 5 years. The data period starts from June
2004 and ends in June 2007. The applied method for analyze are Linear regression and Markov switching regression. Using Interest rate, stock return
and implied volatility variables, the result shows that All of the variables that is interest rate, stock return, and implied volatility are significant toward the
CDS spreads. 2. Greatrex 2008 had conducted a research relates to the credit default swap
market’s deteminants. In her research, Greatrex uses 333 firms as the sample and employ 6 variables to be investigated. She uses Stock retuns, leverage
ratio, volatility, the rating based index, treasury rate, slope of yield curve and
