Construction of simplified indices of country risk. An Approach to the cases of Europe and America

• Main Authors: ARTURO RODRÍGUEZ CASTELLANOS, JUAN CARLOS AYALA CALVO, TXOMIN ITURRALDE JAINAGA
• Format: Article
• Language: English
• Published: Universidad del País Vasco (UPV/EHU) 2002-12-01
• Series: Management Letters/Cuadernos de Gestión
• Subjects: Country risk; risk index; Europe; America
• Online Access: http://www.ehu.es/cuadernosdegestion/revista/index.php/en/published-issues?y=2002&v=2&n=2&o=4

The authors of this paper propose the construction of two new country risk indexes, called «Simplified Index and «Observational Index», based on the semester values of each one of the nine variables that composethe country index elaborated by Euromoney, in the period between September of 1992 and September of 2002, for 41 European countries and 30 American countries. Both indices contain only four variables (of the nine proposed by the Euromoney country risk index) and still allow a reliable representation of the Euromoney ranking of countries by country risk. Furthermore, the study shows that the relative weight of each variable of the country risk index differs for different country clusters, i.e. Europe and America.