Abstract
The purpose of this paper is to replicate Euromoney's and Institutional Investor's country risk ratings on the basis of economic and political variables. The evidence reveals that country risk ratings respond to some of the variables suggested by the theory. In particular, both the level of per capita income and propensity to invest affect positively the rating of a country. In addition, high-ranking countries are less indebted than low-ranking countries. It also appears that the ability of the model to duplicate the two country risk measures is very similar and both magazines' ratings can be replicated to a significant degree with few available economic statistics.
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*Jean-Claude Cosset received his Ph.D. in Business Administration from Columbia University. He is Professor of Finance at Laval University. His research interests focus on international finance.
**Jean Roy received his Ph.D. in finance from The Wharton School, University of Pennsylvania. He is Associate Professor of Finance at Laval University. His interests center on the use of information technology in financial management.
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Cosset, JC., Roy, J. The Determinants of Country Risk Ratings. J Int Bus Stud 22, 135–142 (1991). https://doi.org/10.1057/palgrave.jibs.8490296
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DOI: https://doi.org/10.1057/palgrave.jibs.8490296