%0 Journal Article %T The Influence of ESG Factors on Sovereign Credit Ratings in Sub-Saharan Africa: A LASSO and Random Forest Approach %A Madina Ishimwe %A Milliam Niyonshuti %A Min Su %A Clement Mintah %A Edward Appau Nketiah %A Emefa Garnet %J Open Access Library Journal %V 12 %N 6 %P 1-22 %@ 2333-9721 %D 2025 %I Open Access Library %R 10.4236/oalib.1113346 %X This study examines the impact of Environmental, Social, and Governance (ESG) factors on sovereign credit ratings in Sub-Saharan African countries using LASSO and Random Forest models. Sovereign credit ratings, issued by major rating agencies, play a crucial role in determining a country¡¯s borrowing costs and investment attractiveness. Traditionally, these ratings have been influenced by macroeconomic factors; however, recent trends suggest that ESG considerations are becoming increasingly relevant. By applying statistical prediction models, this study assesses the relative importance of ESG factors versus non-ESG (macroeconomic) variables in credit rating determination. The results reveal that governance and macroeconomic factors are the dominant determinants of sovereign credit ratings in upper-middle-income Sub-Saharan African countries, whereas environmental factors play a crucial role in lower-income nations. The Random Forest model outperformed the LASSO regression in predictive accuracy, reinforcing the significance of non-linear relationships in credit rating determinants. The findings highlight the necessity for policymakers to integrate ESG considerations into national financial and economic strategies to improve creditworthiness and attract sustainable investments.
%K ESG Factors %K Sovereign Credit Ratings %K Random Forest %K Macroeconomic Variables %K Sub-Saharan Africa %U http://www.oalib.com/paper/6857640