Evaluating Country Risks for International Investments

Tools, Techniques and Applications

This unique volume presents a trailblazing project of country risk analysis for international investments. It develops an innovative range of tools and techniques on the cutting edge of financial theories and practices for assessing and incorporating country/political risk in cross-border investment strategies. These tools and techniques address the nature of country risk as a broad concept that comprises an underlying combination of economics, finance, geopolitics, sociology, and history.

Contents:

• Introduction:

  • Terminology and Definitions of Country Risk (Ephraim Clark)
  • Methods and Techniques of Country Risk Analysis (Ephraim Clark)

• Portfolio Investment:

  • An Alternative Measure of the "World Market Portfolio": Determinants, Efficiency, and Information Content (Ephraim Clark and Konstantinos Kassimatis)
  • Emerging Markets: Investing with Political Risk (Ephraim Clark and Radu Tunaru)
  • Country Financial Risk and Stock Market Performance: The Case of Latin America (Ephraim Clark and Konstantinos Kassimatis)
  • International Equity Flows, Marginal Conditional Stochastic Dominance and Diversification (Ephraim Clark and Konstantinos Kassimatis)

• Foreign Direct Investment:

  • Valuing Political Risk (Ephraim Clark)
  • Political Risk in Hong Kong and Taiwan: Pricing the China Factor (Ephraim Clark)
  • Quantification of Political Risk with Multiple Dependent Sources (Ephraim Clark and Radu Tunaru)
  • Modeling Stochastic Political Risk for Capital Budgeting: Currency Crises (Ephraim Clark and Radu Tunaru)
  • Pricing the Cost of Expropriation Risk (Ephraim Clark)

• Sovereign Debt:

  • Sovereign Debt Discounts and the Unwillingness to Pay (Ephraim Clark and Amel Zenaidi)
  • Macroeconomic Effects on Emerging-Markets Sovereign Credit Spreads (Ephraim Clark and Konstantinos Kassimatis)
  • Asymmetric Information and the Pricing of Sovereign Eurobonds: India 1990–1992 (Ephraim Clark and Geeta Lakshmi)

• Foreign Currency:

  • Foreign Currency Derivatives versus Foreign Currency Debt and the Hedging Premium (Ephraim Clark and Amrit Judge)
  • Asymmetric Foreign Currency Exposures and Derivatives Use: Evidence from France (Ephraim Clark and Salma Mefteh-Wali)
  • Foreign Currency Derivative Use and Shareholder Value (Yacine Belghitar, Ephraim Clark and Salma Mefteh-Wali)
  • The Determinants of Foreign Currency Hedging: Does Foreign Currency Debt Induce a Bias? (Ephraim Clark and Amrit Judge)

Readership: Graduate students and researchers interested in the topics of risk management and international investment.
Key Features:

• Explains the multi-faceted dimensions of cross-border risk with respect to portfolio investment, foreign direct investment, and cross border borrowing and lending
• Identifies the main sources of risks and opportunities arising from the growing integration of international financial and product markets
• Develops a range of tools and techniques on the cutting edge of financial theory and practice for assessing and incorporating country/political risk in cross-border investment strategies