Financial Crises And Country Risk Of Emerging Markets

Veniamin Todorov ()
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Veniamin Todorov: University of Economics - Varna

An Annual Book of University of Economics - Varna, 2010, vol. 82, issue 1, 363-403

Abstract: The present study examines the connection between the financial crises and the country riskof emerging markets. In time of financial crises there is an increase in country risk, a rise in the priceof external financing and a decrease in the net volume of capital flows. Through an analysis of thechange in interest rates and the amount of external financing of emerging markets, the work outlinesthe specificity of country risk and its manifestation during financial crises of systemic significancein the past 16 years, which started from a particular country. The study shows that in time of a crisis that begins in a developed country, the investors on the global financial markets get a differentsense of the country risk of the emerging markets in comparison with contemporary crises, whichbegin from a particular country, belonging to the group of theemerging markets. The level of thecountry risk during the American crisis is lowest in comparison with the rest, the crisis was leastanticipated, i.е. the country risk of emerging markets increases fastest of all, and the volume of thenet capital flows turns out to be times bigger compared to the rest of the crises.

Keywords: Financial Crises; Country Risk; Emerging Markets (search for similar items in EconPapers)
Date: 2010
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