Country risk

The costs of debt crises are not invariant to the foreign debt instrument composition: bank loans or bonds. The lending boom of the 1990s witnessed considerable variation over time and across countries in the debt instrument used by emerging market (EM) borrowers. This paper tests how macroeconomic fundamentals affect the composition of international debt instruments used by EM borrowers. Analysis of micro-level data using ordered probability model shows that macroeconomic fundamentals explain a significant share of variation in the ratio of bonds to loans for private borrowers, but not for the sovereigns.

Developing counltries with heavy foreign direct investment need not worry about providing special tax incentives for foreign investment. But they must be sure that their tax system is competitive with the home tax regime of a marginal investor who has access to toreign tax credits against domestic tax liabilities. L ; \ b l he Policy. Rcseareh, and I tcrema A! !ars (rrrrnpex r d te, l'R I UA i-kIr:g Pa pers 1}d:sscmnina: te LCfindings ozf wik pors to encourage the excfhange Of ideas among Bank s:aff an*' al ohcr, rwrcstn,ed in devclorment issucs Ihcse papers carry the names of the authorm reflet O their N IC." ad 6 m d *i a -d (Ii a Pchrdng:i Ihe find:ngi. Lrtcrpretaju ns. and c,rncl.sions are r he authiirs Own 0 Ies sFriui' n"i Ih aI:nr :c,4 " Ic \i -!, 1 -li rI (f 1 ) f r rirs r,.a aagarneri. or arrn ofrs o r r errNrr Countries

This study evaluates Bosnia and Herzegovina's equity market using a country risk premium (CRP)-based valuation framework suited to structurally constrained frontier markets. In conditions of fragmented trading, negligible turnover, and weak price discovery, conventional asset-pricing models offer limited guidance. Augmenting a U.S. base equity risk premium with Bosnia's sovereign default spread yields an implied cost of equity of approximately 17.6%. Benchmarking against regional peers shows persistent underperformance in market size, liquidity, and valuation. The analysis highlights how fragmentation and institutional constraints sustain a high required return and discusses policy pathways for gradual risk-premium compression.

This study evaluates Hungary's equity market using Damodaran's country risk premium (CRP) framework to estimate its cost of equity and assess investment attractiveness within the Central and Southeast European context. The paper integrates Hungary's sovereign credit rating, default spread, and a volatility adjustment to compute an implied cost of equity of approximately 11.5%, placing it among the least risky regional markets. The methodology benchmarks Hungary against peers including Romania, Slovakia, Serbia, Bosnia, and North Macedonia using key structural indicators such as market capitalization, turnover, P/E ratios, and foreign ownership. Findings show that Hungary benefits from deeper market liquidity, broader investor participation, and stronger integration with global capital markets compared to its frontier neighbors. However, institutional and political risksparticularly EU governance disputescontinue to inflate its risk premium above fundamentals. The results underscore how sovereign risk, market structure, and integration interact to shape equity valuations. The study concludes that targeted reforms aimed at enhancing governance and investor protections could lower Hungary's risk premium and align it more closely with developed EU markets, offering a roadmap for peer economies undergoing similar transitions. Implications for Central European audience: The paper provides a replicable framework for evaluating equity risk in post-socialist economies. Hungary's example illustrates how institutional quality, liquidity, and policy credibility jointly influence investment outcomes. These insights can guide reforms and capital market strategies across Central and Eastern Europe.

This study examines the influence of foreign direct investment (FDI) inflows, alongside other potential factors, on India's economic growth. Our findings reveal that increased domestic capital formation positively and significantly contributes to economic growth, while population growth emerges as the primary impediment. Notably, the growth in trade openness and FDI inflows seem to have a minimal effect on India's economic expansion. This article aims to achieve two key objectives: First, it will review the existing literature on the relationship between Foreign Direct Investment (FDI), trade, and economic growth. FDI has become a central area of research for academics and policymakers in India. The current study explores various aspects of FDI inflows into India following economic reforms, including their present status, global position, trends, growth patterns, origins, sectoral distribution, regional allocation, and influencing factors. Additionally, this article analyses the drivers of foreign direct investment and its efficacy in promoting development in India. It investigates the reasons behind India's comparatively low FDI volumes. The argument is that a nation's capacity to attract FDI is shaped by its economic structure, developmental phase, available FDI sources, and the extent of complementary resources it holds. The article also suggests that while FDI is a potent driver of development, significant economic development. Keywords: FDI, Make in India, Investors, GDP, Development

The paper uses gravity model, augmented with institutional related FDI determinants to estimate the stock of bilateral FDI potentials between Macedonia and 24 European Union countries. We use panel data on Macedonia's bilateral FDI activity across EU-24 countries, for the period 1997-2010. The paper employees augmented gravity model of FDI, considering for host country institutional factors that determine the entrance of foreign capital in Macedonia. The findings of the paper suggest that FDI into Macedonia from EU-24 countries is determined by market size and institutional related determinants.

The paper uses gravity model, augmented with institutional related FDI determinants to estimate the stock of bilateral FDI potentials between Macedonia and 24 European Union countries. We use panel data on Macedonia's bilateral FDI activity across EU-24 countries, for the period 1997-2010. The paper employees augmented gravity model of FDI, considering for host country institutional factors that determine the entrance of foreign capital in Macedonia. The findings of the paper suggest that FDI into Macedonia from EU-24 countries is determined by market size and institutional related determinants.

Purpose: The study aimed to investigate the causes of gender-based domestic violence, particularly focusing on how increased unemployment due to migration and displacement contributes to such violence. It also sought to understand the effects of this violence on the victims' lives, emphasizing the need to address underlying gender dynamics within refugee communities. Methodology: The research was conducted among informal leaders of the Sudanese male community, who are UNHCR asylum seekers residing in Cairo's Ard El Lewa neighborhood of Giza. Twelve individuals were selected for two focus group discussions; nine participants had been registered for periods ranging from three to thirteen years and spoke Arabic and other Sudanese languages. Data collection involved a comprehensive questionnaire and a qualitative approach to explore the unnoticed and unreported causes of domestic violence. Findings: The findings highlighted that excessive unemployment among refugee men significantly contributes to domestic violence, serving as a "trigger point" for violent situations at home. The study also identified an increase in violence due to reduced activity levels and psychological issues, which negatively affect emotional health. The results underscored the importance of understanding cultural and gender-specific factors influencing violence within this community. Unique Contribution to Theory, Practice and Policy: The study contributes to the theoretical understanding of gender-based violence by emphasizing the role of economic and psychological stressors in refugee contexts. Practically, it recommends establishing ongoing discussions within the male refugee community either in single sex groups or demographically sensitive formations to clarify concepts of violence and identify culturally appropriate support services. Policy wise, there is a need for broader awareness and intervention strategies that address the latent gender dimensions of violence, promoting culturally sensitive approaches to prevent and respond to GBV among refugee populations.

Production sharing contracts (PSC) are a pervasive fact of economic life in developing countries. They involve a government-contractor relationship with the aim of exploring, developing and producing oil within a Joint Venture environment. This public-private partnership form of collaboration often entails conflict in managing the Joint Venture because of the different strategic objectives between its partners. The rights of the host government and the obligations of the foreign contractor are central in a PSC. This proposes numerous complexities and dilemmas in managing the Joint Venture. Joint Ventures although being an increasingly common direction of corporate strategy over the past two decades have accentuated the problem of measuring the business performance. Joint Ventures performance determinants are problematic in the sense that both parties find it difficult to distinguish between bad luck and poor performance. The major difficulty in managing the performance of a Joint Venture lies in the confusion of how to identify and measure the performance. The controversy often stems from the lack of clarity of what a determinant of performance is. The development of key performance factors and indicators receives a considerable attention as being a powerful management tool. This study will present a conceptual framework of the performance management determinants of non-equity petroleum Joint Ventures under a PSC contractual agreement. The proposed conceptual framework will contribute to the academic knowledge in managing non-equity petroleum Joint Ventures, as well as the contribution to management practitioners in managing oil business within the oil production sharing contract system.

Capital flows to developing countries are small and take mostly the form of loans rather than direct foreign investment. We build a simple model of North-South capital flows that highlights the interplay between diminishing returns, production risk and sovereign risk. This model generates a set of country portfolios and a world distribution of capital stocks that resemble those in the data.

The main objective of this article is to investigate the impact of various financial, economic, and political risks and economic complexity on the development of the Sukuk market in the Iranian economy. The data required to conduct this research based on the variables of the proposed model were used from the Capital Market Central Asset Management Company, the International Country Risk Guide (ICRG) database, and the MIT University website. The data relating to 2010-2022 is seasonal, and REVIEWS 13 software was used. The model estimation results using the Nonlinear Autoregressive Distributed Lag Model Approach (NARDL) show that the negative shock of political risk reduces the development of the Sukuk market in the short and long term. The negative shock of financial risk in the long term has a negative impact on the development of the Sukuk market. The negative shock of economic complexity reduces the development of the Sukuk market in the short term. The positive shocks of political risk, financial risk, economic risk, and economic complexity in the short and long term led to the development of the Sukuk market. Among the three types of risk, political risk and financial risk have the most impact on sukuk market development. The error correction coefficient in this estimate is negative and statistically significant, which shows that 0.42% of the short-term imbalance is adjusted to reach the long-term balance every year.

This paper investigates the dynamics between house price index and GDP, foreign exchange rates, interest rates and returns on Borsa İstanbul (BIST 100) in Turkey. The empirical results of the ARDL model covering the period between 2010 and 2018 verify that a co-integrating relation exists among the selected variables. The Vector Error Correction Model (VECM) established to analyze the dynamic adjustments in the house price index displayed stability in the long-run. An increase of returns in Borsa İstanbul significantly contributes to decline in house prices which reveal the value of housing as a long term investment tool in Turkey. The effect of lagged exchange rates on house prices signals a source of vulnerability that may lead to macroeconomic imbalances due to exchange rate volatility. It is concluded that policy precautions aiming to stabilize exchange rate movements should also contribute to assuaging irregularities in house prices in the long run.

This paper examines effects of securitization and the resulted market structural change on mortgage yield spreads in Australia. Securitization has enabled mortgage corporations (new entrants solely rely on securitization funding) to intensify competition in the mortgage market with traditional lenders from 1994 to 2003. Responding to the heightened competition, banks and building societies largely reduced their yield spreads (from nearly 400 basis points to 150 basis points). However, there is no study to address how and extent securitization contributed to their reductions. Cointegration tests find positive relationships between bank and building society yield spreads and market concentration, but negative relationships between their spreads and securitization. These findings are consistent with literature in securitization (e.g., Gorton and Pennacchi, 1995; Kolari et al., 1998) and in the price-concentration relationship (e.g., Berger and Hannan, 1989). Yes Yes

his study investigated the impact of agricultural exports and institutional quality on economic growth in ECOWAS countries over the period 2000 to 2023. Utilizing panel data from the World Bank Development Indicators and employing the Dynamic Common Correlated Effects (DCCE) estimator, the study revealed several key findings. Agricultural exports were found to have a significant and positive impact on economic growth of ECOWAS member States in the long run, while the short-run impact is positive but insignificant. Institutional quality, on the other hand, boosted economic growth in both the long and short run, with a significant impact in the short run but an insignificant one in the long run. Additionally, capital and trade openness had positive yet insignificant effects on economic growth in both the long and short run. Conversely, exchange rate and labour negatively affected economic growth within the ECOWAS in both the long and short run. Overall, the results underscore the importance of agricultural exports and institutional effectiveness in promoting economic growth in ECOWAS countries, particularly over the long term. Based on these findings, the study recommends that policymakers in ECOWAS countries prioritize agricultural exports development through infrastructure investments, research, export diversification, and farmer support to enhance productivity and competitiveness. Furthermore, it suggests strengthening institutions by promoting good governance, transparency, and accountability, as well as enhancing trade openness through agreements, reduced trade barriers, and investments in trade infrastructure to facilitate technology transfer and drive economic growth in ECOWAS countries.

O presente trabalho tem como objetivo verificar a relação entre o resultado primário e a dívida líquida do setor público, verificando a existência e o efeito da dominância fiscal na economia brasileira. Bem como, salientar a importância da política monetária e sua independência em relação às políticas fiscais e os efeitos nocivos da dominância fiscal na economia. Foi utilizada, uma abordagem do modelo VAR com suporte do teste de causalidade de Granger. Os resultados sugerem que o endividamento público compromete a inter-relação entre a política fiscal e a política monetária, ocasionando o efeito de dominância fiscal.

In finance literature, interaction or relationship between portfolio investments and index return were examined in many studies. However most of these studies were conducted at monthly or annual frequency with a restricted investor classification. In this study, we analyze the interaction between the net purchases of three different investor groups and market return by using daily data from the Korean Stock Exchange. Vector Auto Regression (VAR) model results show that individual and foreign investors follow a momentum strategy whereas institutional investors follow a contrarian strategy. During the crisis period, institutional and individual investors did not change their trading strategies. On the other hand, there is a positive correlation between foreign investors' net purchase and lagged market returns during the crisis period as in the case of the full period but different from full sample period, this correlation is not statistically significant.

Economic complexity, reflecting the collective know-how and the depth of national capability sets, features prominently as a key concept within the economic growth literature. This study addresses the multidimensional nature of economic complexity by analyzing the interplay between economic growth (GDP per capita), the Economic Research Complexity Index (ECIR) reflecting knowledge generation capacity, the Economic Trade Complexity Index (ECITRA) capturing the sophistication of a nation's export structure, and the Economic Technology Complexity Index (ECITEC) indicating technological advancement. To provide a more robust analysis, population (POP) and human capital (HUM) are included as control variables. The study investigates these relationships through three distinct models, each focusing on one dimension of complexity. The analysis focuses specifically on the world's 10 most complex economies: Austria,

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Aggregate fluctuations in emerging countries are quantitatively larger and qualitatively different in key respects from those in developed countries. Using data from Mexico and Canada, this paper decomposes these differences in terms of shocks to aggregate efficiency and shocks that distort the decisions of households about how much to invest, consume, and work in a standard model This paper-a product of the Growth and the Macroeconomics Team, Development Research Group-is part of a larger effort in the department to understand macroeconomic volatility in developing countries. Policy Research Working Papers are also posted on the Web at . The author may be contacted at [email protected]. of a small open economy. The decomposition exercise suggests that most of these differences are explained by fluctuations in aggregate efficiency, distortions in labor decisions over the business cycle, and, most importantly, fluctuations in country risk. Other distortions are quantitatively less important.

Bu calismanin amaci Turkiye’deki makro ekonomik degiskenlerin hisse senedi getirileri uzerine etkisini belirlemektir. Bu amacla Arbitraj Fiyatlama Modeli (AFM) ekseninde Ocak 2000-Aralik 2009 donemi Istanbul Menkul Kiymetler Borsasinda islem goren hisse senetlerinin getirileri uzerinde hangi makro ekonomik degiskenlerin belirleyici oldugu incelenmistir. Analizde bagimli degisken olarak IMKB-100 hisse senedi endeksi, bagimsiz degiskenler olarak tuketici fiyat endeksi, ihracatin ithalati karsilama orani, sanayi uretim endeksi, imalat sanayi uretim endeksi, imalat sanayi kapasite kullanim orani, altin fiyatlari, dolar doviz kuru, tasarruf mevduati faiz orani, cari islemler dengesi, ic borc stoku, dar ve genis tanimli para arzi (M1, M2), kullanilmistir. Calismada zaman serisi verileri “En Kucuk Kareler Yontemi”ne gore degerlendirilmis ve verilerin analizinde dogrusal regresyon yontemi kullanilmistir. Elde edilen sonuclara gore, hisse senedi getirilerinin altin fiyatlarindan ve tasarruf ...

Este trabalho avalia o impacto de ajustes fiscais sobre a dinâmica macroeconômica brasileira entre 1999 e 2018, empregando um Modelo de Vetor de Correção de Erros (VECM) para analisar choques em gastos e receitas. As estimativas indicam que a composição do ajuste fiscal é um fator crucial. A consolidação fiscal por meio do aumento de receitas demonstra ser mais prejudicial à atividade econômica e à trajetória da dívida pública em comparação com a consolidação baseada na redução de despesas. Adicionalmente, os resultados não associam a consolidação fiscal a recessões de grande magnitude no longo prazo