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The Effects of Economic Crisis on Country Risk

Author

Listed:
  • Mariana IOVITU

    (A.S.E Bucureşti, Romania)

  • Elena-Mihaela ILIESCU

    (Universitatea “Titu Maiorescu”, Bucureşti, Romania)

Abstract

It is widely accepted that risk is a constant of the human activity in general. From this perspective, the expansion of business across country borders requires identification, assessment and brief analysis of the overall risk that operators would face in a targeted national economy.Country risk is the one that shows in a general manner the international business risks, reflecting the overall situation and the cumulative effects of other risks. It is therefore considered to be a diagnosis of the socio-economic potential of the country receiving international economic flows. The complex, dynamic and variable character of the "new economy" has imposed a permanent adaptation of the country risk concept and has increased its importance given the international affairs. This is because knowing and understanding it, enable the economic agents to make rational decisions, minimizing the risks and increasing the profitability of their foreign activities. Also for a greater efficiency in decision making regarding internationalization, a specific activity became essential, which is country risk management. Country risk issues remain open to interpretations, especially in the context of economic crisis. The situation the world economy is facing today, changes considerably the criteria and also the assessments regarding the cataloguing of country risk.

Suggested Citation

  • Mariana IOVITU & Elena-Mihaela ILIESCU, 2009. "The Effects of Economic Crisis on Country Risk," Timisoara Journal of Economics, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 2(4(8)), pages 191-198.
  • Handle: RePEc:wun:journl:tje:v02:y2009:i4(8):a04
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    References listed on IDEAS

    as
    1. Kemp, M. H. D., 2005. "Risk Management in a Fair Valuation World," British Actuarial Journal, Cambridge University Press, vol. 11(04), pages 595-712, October.
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    More about this item

    Keywords

    risk; uncertainty; country risk; systematic risk; economic decline; risk management;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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