The country risk for Romania
AbstractThe administration of a financial activities portfolio usually generates two categories of risks: the risk exposure and the market risk. The purpose is to present the evolution of the country risk of Romania through using the specific statistic indicators with the granted classification by the main rating agencies. The risk exposure is the result of credit activity to a public debtor (in this case, a country), this activity being applied by banks at international level. From this point of view, the analysis of the country risk must offer information on the base of which the banks can establish the upper limits of exposure to a country and can monitories as possible in real time, the exposure to the respective country. The market risk appears as a result of unfavorable changes that may appear in a country’s financial market and that may affect the performance of activities that compose the portfolio of a bank, which has an exposure in relations with the respective country. In the literature approaching the country risk, the market risk is as inexistent or it is treated with superficiality, although it constitutes a fundamental component of the banking risk, concerning the development of the activities that unfold on these markets. From this perspective the approach of the country risk is insufficient and the developed methodologies must be extended through including this last aspect. But this paper does not purpose to introduce new components in the methodologies of analysis concerning the country risk and the market risk. The administration of a financial activities portfolio usually generates two categories of risks: the risk exposure and the market risk. The purpose is to present the evolution of the country risk of Romania through using the specific statistic indicators with the granted classification by the main rating agencies. The paper has three principal parts - the first tries to familiarize the reader with the definitions and the fundamentals of the country risk analysis, the second presents the statistic indicators and methods used in the assessment of the country risk and the third focuses on the Romanian case.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5857.
Date of creation: 21 Nov 2007
Date of revision:
counytry risk; Romania; evaluation methods;
Find related papers by JEL classification:
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- F3 - International Economics - - International Finance
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- Suhejla Hoti & Michael McAleer, 2004. "An Empirical Assessment of Country Risk Ratings and Associated Models," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 18(4), pages 539-588, 09.
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