Abstract
nvestors assess the environment and the level of risk before they invest in a specific region or country. Several country risk indexes have been developed since the beginning of the 1990s, using risk factors such as politics, the economy and sovereign risk factors. This study aims to determine the relationships between the country risk index, economic performance and good governance. The study implemented a quantitative research methodology with panel data, focusing on the four Visegrad countries, using time-series data from 1996 to 2019. The results indicate both long- and short-run relationships. Both GDP and good governance significantly impact the country risk index with coefficients of between 0.17 to 0.31 and 0.02 to 0.15 according to different estimation models. The Granger causality results indicated that both GDP and good governance cause changes in the country risk indexes of the countries, and good governance causes increased economic performance. In conclusion, the study showed clear evidence that a lower country risk index is important to attract investment and sustained economic growth and good governance is critical in this process.
Highlights
The study of the relationship between country risk, including political, governance and economic risk factors, has been gaining momentum over the last two decades
The findings indicate that country risks significantly impact the economy, stock market volatility and investment
The results show that the level of corruption does not affect Foreign Direct Investment (FDI) inflows in these countries, but the size of the economy and the effectiveness of governance play an important role
Summary
The study of the relationship between country risk, including political, governance and economic risk factors, has been gaining momentum over the last two decades. Various country risk indexes have been developed, and academics, researchers and investors use these indexes for research and decision-making purposes. These indexes include the Euler Hermes risk index (Euler Hermes, 2021), risk rating agencies such as Moody’s, Standard and. Country risk refers mainly to the performance and stability of governance in a country. For this reason, the quality of governance is important, and the notion of "good governance" started in the 1990s.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Journal of Eastern European and Central Asian Research (JEECAR)
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
