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Country Risk Analysis: A Survey of the Quantitative Methods

With globalization and financial integration, there has been rapid growth of international lending and foreign direct investment (FDI). In view of this emerging trend, country risk analysis has become extremely important for the international creditors and investors. This paper briefly discusses the concepts and definitions, and presents a survey of the quantitative methods that are used to address various issues related to country risk. It also gives a summary review of selected empirical studies that use these techniques. While these studies display a distinct chronological pattern of gradual improvements in terms of technique and analytical competence none of them is adequate in terms of its scope and coverage. This paper also notes that in view of changing global economic and financial environment, greater availability of quantitative data, and enhanced computing capacity, the researchers should focus on the possibility of applying better techniques to more extensive models of country risk analysis.

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Article provided by Camera di Commercio di Genova in its journal Economia Internazionale / International Economics.

Volume (Year): 62 (2009)
Issue (Month): 1 ()
Pages: 69-94

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Handle: RePEc:ris:ecoint:0014
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  1. Suk Hun Lee, 1993. "Relative Importance of Political Instability and Economic Variables on Perceived Country Creditworthiness," Journal of International Business Studies, Palgrave Macmillan, vol. 24(4), pages 801-812, December.
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  12. Pierre Dhonte, 1975. "Describing External Debt Situations: A Roll-over Approach (La description de l'endettement extérieur: l'approche du refinancement) (La refinanciación y su utilidad para la descripción de situacione," IMF Staff Papers, Palgrave Macmillan, vol. 22(1), pages 159-186, March.
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  14. Edwards, Sebastian, 1984. "LDC Foreign Borrowing and Default Risk: An Empirical Investigation, 1976-80," American Economic Review, American Economic Association, vol. 74(4), pages 726-34, September.
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