Country Risk Research Articles

Geopolitical risk and foreign subsidiary performance of emerging market multinationals

In recent years, enterprises have faced increasing uncertainty due to rising geopolitical risks. This paper examines the impact of geopolitical risk (GPR) in host countries on the performance of foreign subsidiaries of A-share-listed Chinese multinational enterprises (MNEs) from 2003 to 2020. The results show that the GPR of host countries negatively affects the foreign subsidiary performance of Chinese MNEs. The deteriorated local business environment acts as a channel for this negative relationship. Moreover, such a negative relationship is mitigated for listed firms with more international experience and senior executives with an overseas background, when the foreign subsidiaries do not operate in sensitive industries or when there is a better institutional environment in the host countries. This study extends the literature on how external uncertainty affects the performance of foreign subsidiaries of emerging market multinational enterprises. It also sheds light on the internationalization of firms through the management of international uncertainty.

Inequalities in Mortality in the Asia-Pacific: A Cross-National Comparison of Socioeconomic Gradients.

Social inequalities in mortality are poorly studied in much of the Asia-Pacific. Using data from harmonized nationally representative longitudinal health and aging surveys our study systematically assesses mortality disparities across 3 standardized measures of socioeconomic status in 7 Asia-Pacific countries. We used data from multiple waves of 7 representative sample surveys: the Health, Income and Labour Dynamics in Australia survey, China Health and Retirement Longitudinal Study, the Indonesian Family Life Survey, the New Zealand Health, Work and Retirement survey, the Korean Longitudinal Study on Ageing and the Health, Aging and Retirement in Thailand survey, and the Japanese Study of Aging and Retirement. We use Cox proportional hazards modeling to examine how the hazard of mortality differs across domains of social stratification including educational attainment, wealth, and occupational status across countries. We found consistent and pervasive gradients in mortality risk in the high-income countries by all available measures of social stratification. In contrast, patterns of inequality in adult mortality in middle-income and recently transitioned high-income countries investigated varied depending on the measure of social stratification, with strong gradients by wealth but mixed gradients by education. Analyzing social gradients in mortality in the Asia-Pacific shows that inequalities, especially wealth-based inequalities, in later-life health are present across the region, and that the magnitude of social gradients in mortality is overall larger in high-income countries as compared to middle-income countries.

Long-run asymmetric effects of financial risks on Sukuk market development: empirical evidence from Malaysia

Purpose The purpose of this study is to empirically investigate the asymmetric effects of financial risk on Sukuk market development for a sample of Malaysian countries over the period of 2010–2021. Design/methodology/approach This study refers to the International Country Risk Guide (ICRG) in determining the financial risk factors to be studied in addition to the Malaysia financial stress index (FSI) to capture changes in financial risk level. The authors use the nonlinear autoregressive distributed lag (NARDL) model to tackle the nonlinear relationships between identified financial risk variables and Sukuk market development. Findings The results suggest the existence of a long-run relationship between foreign debt service stability, international liquidity stability (ILS), exchange rate stability (ERS) and financial stress level with the Sukuk market development in Malaysia. Indeed, higher ILS and ERS will boost Sukuk market size, whereas higher foreign debt services and financial stress are negatively related to Sukuk market development. Findings also indicate that the long-run positive and negative impacts of identified financial risk components on Sukuk market development are statistically different. Taking into account the role of the Sukuk market in facilitating Malaysia’s economic growth, the country should aim to keep the foreign debt-to-GDP ratio at a sustainable level. Research limitations/implications This study points to three possible directions for future research. The first is the differential impact of financial risk components on Sukuk issuance for different Sukuk structures. As more data becomes available in the future, this area could be further explored by conducting the above analysis for different combinations of Sukuk structures and currency denominations. In addition, future researchers could also consider exploring the variability of financial risk impacts through comparative studies of the leading Sukuk-issuing countries to account for differences in regulatory frameworks and supporting infrastructure. Practical implications This study provides valuable practical and policy implications for strengthening the growth of the Sukuk market. While benefiting from the diversification benefits of funding sources to finance private or government projects and developments, Malaysia should remain vigilant to global economic conditions, foreign exchange markets and financial stress levels, as all of these factors may significantly influence investor sentiment and the rate of return offered by Sukuk issuance. Originality/value The use of the NARDL approach, which investigates the long-run effects of financial risk factors on Sukuk market development in Malaysia, makes this study a valuable addition to the literature, as there has been little research into the asymmetric effects of those variables on Sukuk market development using samples from emerging Asian markets.

Identification of influential weather parameters and seasonal drought prediction in Bangladesh using machine learning algorithm

Droughts pose a severe environmental risk in countries that rely heavily on agriculture, resulting in heightened levels of concern regarding food security and livelihood enhancement. Bangladesh is highly susceptible to environmental hazards, with droughts further exacerbating the precarious situation for its 170 million inhabitants. Therefore, we are endeavouring to highlight the identification of the relative importance of climatic attributes and the estimation of the seasonal intensity and frequency of droughts in Bangladesh. With a period of forty years (1981–2020) of weather data, sophisticated machine learning (ML) methods were employed to classify 35 agroclimatic regions into dry or wet conditions using nine weather parameters, as determined by the Standardized Precipitation Evapotranspiration Index (SPEI). Out of 24 ML algorithms, the four best ML methods, ranger, bagEarth, support vector machine, and random forest (RF) have been identified for the prediction of multi-scale drought indices. The RF classifier and the Boruta algorithms shows that water balance, precipitation, maximum and minimum temperature have a higher influence on drought intensity and occurrence across Bangladesh. The trend of spatio-temporal analysis indicates, drought intensity has decreased over time, but return time has increased. There was significant variation in changing the spatial nature of drought intensity. Spatially, the drought intensity shifted from the northern to central and southern zones of Bangladesh, which had an adverse impact on crop production and the livelihood of rural and urban households. So, this precise study has important implications for the understanding of drought prediction and how to best mitigate its impacts. Additionally, the study emphasizes the need for better collaboration between relevant stakeholders, such as policymakers, researchers, communities, and local actors, to develop effective adaptation strategies and increase monitoring of weather conditions for the meticulous management of droughts in Bangladesh.

Is the conventional wisdom on resource taxation correct? Mining evidence from African countries' tax legislations

Our study reexamines the link between country risk and government take, following research by Adebayo et al. (2021). Our approach complements theirs. We study the mining tax policy choices in an environment of uncertainty and risk country for twenty-one African gold-producing countries. We calculate a de jure government take based on the complete application of laws and regulations for three “representative mines”. Our results reconcile Adebayo et al.'s theoretical model with empirical results. Higher country risk is associated with lower de jure government take. We also show a complex nonlinear relationship between country risk and de jure government take. Finally, our results suggest that stronger political institutions “capture” a lower de jure government take. The coefficient of the interaction term suggests that as the political regime becomes more democratic, the marginal effect of country risk on de jure government revenue becomes increasingly less adverse up to a specific threshold, beyond which it turns positive. We then introduce each political component of country risk and its interaction term to track transmission channels.

Does It Matter for Africa with Whom It Trades? Estimations of the Impacts of Africa’s Trade with the EU and China on Corruption

ABSTRACT This research builds upon theoretical assumptions regarding the relationship between openness to international trade and corruption. It seeks to answer the question of whether it matters for Africa with whom it trades. Specifically, our goal is to estimate and compare the impacts of Africa’s trade with two key entities: the European Union (EU), its traditional primary trading partner whose share in Africa’s bilateral trade has recently declined, and China, its emerging trading partner whose share in Africa’s bilateral trade has been steadily increasing. This assessment will be focused on impacts on corruption. Our research utilizes a panel dataset comprising twenty-eight African countries for the period spanning from 2002 to 2016. We employ regression models including pooled OLS, fixed effects, and random effects, drawing upon data from the International Trade Centre, International Country Risk Guide, and the World Bank. Our findings suggest a weak but positive correlation between Africa’s rising trade activity and corruption. However, this correlation is more pronounced in the case of trade with the EU, where the impact is estimated as positive, as opposed to trade with China, where it is estimated as negative. Additionally, while higher natural resources rents tend to have a negative impact on corruption in Africa, our results indicate that this is not the case of rents derived from trade with the EU.

Testing the relationship between investor risk appetite and country risk: The case of Turkey

Country risk is an important factor affecting the risk appetite of investors who want to create an optimal portfolio by minimizing their risks. Investor risk appetite can affect country risk as a factor contributing to the development of financial markets and the country's economy. The aim of this study is to determine the relationship between investor risk appetite and country risk. Hatemi-J cointegration and Hatemi-J asymmetric causality tests were used to determine the relationship between CDS premium, which is frequently preferred to represent country risk, and domestic and foreign investor risk appetite variables. As a result of the analysis, it has been determined that CDS premium and domestic and foreign investor risk appetite variables are cointegrated, a positive causality from increases in both local and foreign investor risk appetite to CDS premium and a negative or positive causality from decreases in CDS variables to both local and foreign investor risk appetite.

Macro and Micro Factor Influencing Tech Startup Valuation of Private Markets in ASEAN Countries

Startups in ASEAN countries, including Indonesia, Malaysia, Singapore, Thailand, Vietnam, and the Philippines, have grown rapidly over the past five years. However, the current global economic uncertainty has created an imbalance that affects the budding startup ecosystem in ASEAN. A study used econometrics software and secondary data to understand how macroeconomic factors like GDP growth, country risk premium, and initial capital increases affect startup valuations in private markets in these six ASEAN member countries. Seventy-two sample data from deals between 2020 and 2022 were analyzed using various quantitative methods, such as panel data testing, T-test, and F-test. The findings indicate that the amount of money collected and the country's risk premium significantly affect startup valuations in these six member countries. However, GDP growth does not have a statistically significant effect. The F-Test shows that the Average Money Raised, the Country's Risk Premium, and GDP Growth all significantly affect startup valuations in the private markets of these six ASEAN member countries when analyzed simultaneously. The T-test reveals that the Average Money Raised is the most significant independent variable. Therefore, investors should continue fundraising, and the government should create a favorable business environment for startups and themselves. These findings could help stakeholders interested in technological investments to evaluate strategic investment in private markets in Indonesia, Malaysia, Singapore, Thailand, Vietnam, and the Philippines. It could also help academics analyze and understand "Factors Influencing Startups Valuation in Private Markets" and assist other researchers in further developing this study.

A Bibliometric Evaluation of Country Risk, Volatility Spillover and Equity market return of BIMSTEC Nation.

Economic globalization and economic regionalization are influenced by country risk, volatility spillovers, and equity market return. The aim of this study is to use bibliometric analytics approaches to evaluate reliable articles on the relationship between country risk, volatility spillovers, and the return of the Bimstec equities market. The present study reviews the peer-reviewed articles available in the Web of Science (WoS), database relating to 1129 publications for the period 1973-2022. The R software is used to graph the bibliographic documents. The following properties were observed during the bibliometric investigation: (1) The major studies investigate the impact of country risk, volatility spillovers, and stock market return on regional trading bloc members. (2) The main authors deal with different types of volatility spillover, different types of country risk, and different patterns of equity market return and their effects on the global economy and regional trade blocks; (3) the most recent trend topics are related to different methods for calculating the weightage of country risk, volatility spillovers, and equity market return of regional trading blocks such as Bimstec. Numerous studies on economic globalization and regional trading blocs have found considerable impact rates. It promotes commerce investment and technological exchange, and it contributes to the peace, progress, and prosperity of the shared region. Overall, this work lays the groundwork for future scientific investigations that will aid in the growth of this research field.

The impact of female directors on firm risk: A study in the context of G6 countries

he main objective of this study is to assess the impact of female directors on firm risk in the G6 countries (all G7 countries except Italy, since data for Italy are not available). A total of 4617 firm-year observations were collected from six countries: the United States, Japan, Germany, the United Kingdom, France, and Canada. The firm risk measures (risk1 and risk2) are calculated as the ratio of a firm profitability to volatility of profitability. These risk measures capture the risk-seeking behavior of the firm. These ratios are a comprehensive measure of risk-seeking behavior since they capture the decisions made by the incumbent management related to the firm’s operations. The results show that the presence of female directors beyond a threshold point reduces firm risk in the total dataset as well as in individual countries. Interestingly, Europe as a continent and all European countries individually have the highest impact of the presence of female directors above the threshold. In the case of Japan, the presence of female directors has the least influence on firm risk

Gestational diabetes mellitus prevalence in Brazil: a systematic review and meta-analysis.

This study estimates gestational diabetes mellitus prevalence in Brazil. A systematic review was conducted with articles published between 2010 and 2021 on the PubMed, Scopus, Google Scholar, SciELO, LILACS and Virtual Health Library databases, as well as gray literature. Data were extracted using a standardized instrument together with the risk of bias assessment tool proposed by Hoy et al. A meta-analysis with robust variance and random effects was developed. Heterogeneity was verified using I2 and publication bias was assessed using funnel plot and Egger's test. Prevalence according to risk of bias, diagnostic criteria and country's regions was determined by subgroup analyses. A total of 32 studies were included, representing 21,942 women. gestational diabetes mellitus pooled prevalence was 14% (95%CI: 11.0; 16.0), considerably higher than estimates from previous studies. Regarding risk of bias, studies with low, medium, and high risk showed a pooled prevalence of 12%, 14% and 14%, respectively. Overall GRADE certainty of evidence rating was low. Most studies used the International Association of Diabetes in Pregnancy Study Group (IADPSG) criteria or the adapted IADPSG, showing a pooled prevalence of 15% and 14%, respectively. As for region, the pooled prevalence was higher in the Southeast (14%) and lower in the Central-West (9%). This is the first systematic review to provide evidence on gestational diabetes mellitus prevalence at a national level and to demonstrate considerable heterogeneity among articles and the influence of region, diagnostic criteria and study quality on the referred indicator.

WASH Levels and Associated Human Health Risks in War-Prone West African Countries: A Global Indicators Study (2015 to 2021).

Water, Sanitation and Hygiene (WASH) levels have been shown to have impacts on health. However, the knowledge of WASH levels in war-prone West African countries is limited. The study extracted data (2015-2021) from the Joint Monitoring Programme (WHO/UNICEF), World Bank and Demographic and Health Surveys (DHS) to estimate WASH levels in the study countries. Pearson correlation analysis was used to establish the association among the WASH levels. Results showed that women had better access to safe water (56.39%), good sanitation (59.36%) and good hygiene (60.23%) compared to men. The urban population had better access to safe water (57.60%), good sanitation (61.23%), and good hygiene (65.65%) than the rural population. Among the countries under study, Nigeria had the highest access to safe water (36.10%) and good sanitation (24.41%), while Mali had the highest access to good hygiene (27.93%). Pearson correlation analysis showed a strong positive association between safe water and good hygiene (r = .998), safe water and sanitation (r = .996) and hygiene and sanitation (r = .998) at .00 significant levels. Based on the findings, it is recommended that integrated WASH programmes with combined infrastructure development, behaviour change campaigns and community engagement should be encouraged to ensure peaceful and sustainable access to WASH levels.

The relationship between financial risk, financial openness, trade openness, and financial development in Southern Mediterranean countries

The relationship between financial risk, financial openness, trade openness, and financial development in Southern Mediterranean countries

Unveiling the Nexus between Climate Change Performance, Default Risk, and Financial Stability in European Union Countries

Unveiling the Nexus between Climate Change Performance, Default Risk, and Financial Stability in European Union Countries

The quest for explosive bubbles in the Indonesian Rupiah/US exchange rate: Does the uncertainty trinity matter?

The Generalized Supremum Augmented Dickey-Fuller (GSADF) technique is performed to resolve whether the Indonesian Rupiah/US exchange rate has experienced multiple explosive bubbles. The GSADF uncovers that the Indonesian Rupiah/US exchange rate deviates from the fundamental values by six times from January 1985 to September 2023, periodically indicating the presence of numerous explosive behaviors. Once the full-sample period separates into the managed-floating regime and the free-floating regime, the GSADF still detects multiple bubbles. Of particular curiosity on uncertainty trinity, this study underlines that global geopolitical risk negatively drives explosive actions in the ratio of exchange rates for non-traded and traded goods. The global economic policy uncertainty negatively affects speculative bubbles in the exchange rate and the ratio of exchange rates for non-traded. The country's geopolitical risks negatively strike only speculative bubbles in the exchange rate. Further, we find heterogeneity in our results by examining different exchange rate systems. The robustness checks further firmly ascertain across baseline empirical findings.

Do governance settings moderate the effect of country risk on firms' cash holdings? Evidence from China

Do governance settings moderate the effect of country risk on firms' cash holdings? Evidence from China

Investigating the effects of crony capitalism on CO2 emissions

Reducing carbon emissions is crucial on both global and national scales due to their impact on the climate. However, concerns about rent-seeking behavior hindering emissions reduction policies have arisen, as such policies can be costly. The presence of crony capitalism in countries is a significant concern in this regard, which unfortunately has not been considered a research gap. To investigate the impact of crony capitalism on CO2 emissions in 73 countries between 2000 and 2021, this study employed the innovative Method of Moment Quantile Regression (MM-QR). Four proxies for crony capitalism were used, including economic freedom, the International Country Risk Guide (ICRG) indicators, worldwide governance indicators, and a combined proxy of the three proxies aimed at reducing crony capitalism. The results indicated that all four proxies for crony capitalism significantly reduced CO2 emissions at different quantiles. The composite proxy was the most effective, while the ICRG proxy was the least effective. Additionally, all proxies except for the ICRG proxy had a greater impact on reducing CO2 emissions at high quantiles. Therefore, crony capitalism leads to an increase in CO2 emissions. The study confirmed the Kuznets curve and found that energy consumption and industrialization increase CO2 emissions, while higher energy prices and population reduce CO2 emissions.

The JSE Size-Based Indices and Country Risk Components under Bullish and Bearish Market Conditions

The JSE Size-Based Indices and Country Risk Components under Bullish and Bearish Market Conditions

Do governance settings moderate the effect of country risk on firms' cash holdings Evidence from China

Do governance settings moderate the effect of country risk on firms' cash holdings Evidence from China

In the Shadow of Country Risk. Asset Pricing Model of Emerging Market Corporate Bonds

In the Shadow of Country Risk. Asset Pricing Model of Emerging Market Corporate Bonds