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An Illustration of the Impact of Economic and Political Risk Using the Country Credit Rating Model for Japan, Malaysia and Russia

Author

Listed:
  • Carl B.McGowan, Jr.

    (Norfolk State University, USA)

Abstract

In this paper, we demonstrate the use of the country credit rating model in Japan, a developed economy, Malaysia, an upper middle-income economy, and Russia, a lower middle-income economy. We find that the country credit rating model tracks the gradual and minor deterioration of the economic condition of Japan, the financial crisis that occurred in Malaysia in 1997–1998, and the shock that hit the Russian economy in 1998 when the government defaulted on bonds, and the subsequent recoveries in both Malaysia and Russia.

Suggested Citation

  • Carl B.McGowan, Jr., 2008. "An Illustration of the Impact of Economic and Political Risk Using the Country Credit Rating Model for Japan, Malaysia and Russia," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 6(2), pages 143-156.
  • Handle: RePEc:mgt:youmgt:v:6:y:2008:i:2:p:143-156
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    References listed on IDEAS

    as
    1. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
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    4. Reeb, David M. & Mansi, Sattar A. & Allee, John M., 2001. "Firm Internationalization and the Cost of Debt Financing: Evidence from Non-Provisional Publicly Traded Debt," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 36(03), pages 395-414, September.
    5. Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, vol. 38(149), pages 1-27, February.
    6. Levy, Haim & Sarnat, Marshall, 1970. "International Diversification of Investment Portfolios," American Economic Review, American Economic Association, vol. 60(4), pages 668-675, September.
    7. Errunza, Vihang & Losq, Etienne & Padmanabhan, Prasad, 1992. "Tests of integration, mild segmentation and segmentation hypotheses," Journal of Banking & Finance, Elsevier, vol. 16(5), pages 949-972, September.
    8. Vihang Errunza & Ked Hogan & Mao-Wei Hung, 1999. "Can the Gains from International Diversification Be Achieved without Trading Abroad?," Journal of Finance, American Finance Association, vol. 54(6), pages 2075-2107, December.
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    More about this item

    Keywords

    corporate finance; foreign direct investment; economic growth; government policy; political economy;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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