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Article
Publication date: 13 May 2021

Supriyo De, Sanket Mohapatra and Dilip Ratha

Relative risk ratings measure the degree by which a country’s sovereign rating is better or worse than other countries (Basu et al., 2013). However, the literature on the impacts…

Abstract

Purpose

Relative risk ratings measure the degree by which a country’s sovereign rating is better or worse than other countries (Basu et al., 2013). However, the literature on the impacts of sovereign ratings on capital flows has not covered the role of relative risk ratings. This paper aims to examine the effect of relative risk ratings on private capital flows to emerging and frontier market economies is filled. In the analysis, the effect of relative risk ratings to that of absolute sovereign ratings in influencing private capital flows are compared.

Design/methodology/approach

This paper examines the influence of sovereign credit ratings and relative risk ratings on private capital flows to 26 emerging and frontier market economies using quarterly data for a 20-year period between 1998 and 2017. A dynamic panel regression model is used to estimate the relationship between ratings and capital flows after controlling for other factors that can influence capital flows such as growth and interest rate differentials and global risk conditions.

Findings

The analysis finds that while absolute sovereign credit ratings were an important determinant of net capital inflows prior to the global financial crisis in 2008, the influence of relative risk ratings increased in the post-crisis period. The post-crisis effect of relative ratings appears to be driven mostly by portfolio flows. The main results are robust to an alternate measure of capital flows (gross capital flows instead of net capital flows), to the use of fixed gross domestic product weights in calculating relative risk ratings and to the potential endogeneity of absolute and relative ratings.

Originality/value

This study advances the literature on being the first attempt to understand the impact of relative risk ratings on capital flows and also comparing the impact of absolute sovereign ratings and relative risk ratings on capital flows in the pre- and post-global financial crisis periods. The findings imply that emerging and frontier markets need to pay greater attention to their relative economic performance and not just their sovereign ratings.

Details

Studies in Economics and Finance, vol. 38 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 9 November 2015

Mark Adelson and David Jacob

The purpose of the article is to explain the significance of key features of the SEC’s new rules for credit rating agencies. Those rules include three key items: they prohibit the…

Abstract

Purpose

The purpose of the article is to explain the significance of key features of the SEC’s new rules for credit rating agencies. Those rules include three key items: they prohibit the influence of sales or marketing considerations on criteria development; they include guidance that preserves the ability of ratings to serve as relative rather than absolute measures of credit risk; and they require cross-sector consistency of rating symbols. When they were released the significance of the rules was under-appreciated because of other simultaneous regulatory announcements.

Design/methodology/approach

The approach is to consider how effectively the rules address their target issues. In doing so the article explores how the final rules evolved from their original proposed form and from the statutory specifications in the 2010 Dodd-Frank Act.

Findings

The new rules should promote the integrity of credit ratings in the future. They should be effective in reducing the influence of sales and marketing considerations on the development of rating criteria. In addition they should enhance rating integrity through superior cross-sector consistency in the meanings of rating symbols while allowing rating agencies to maintain their traditional emphasis on relative risk.

Originality/value

The authors are not aware of any similar work assessing the selected provisions of the new SEC rules for credit rating agencies.

Details

Journal of Financial Regulation and Compliance, vol. 23 no. 4
Type: Research Article
ISSN: 1358-1988

Keywords

Abstract

Details

Modelling the Riskiness in Country Risk Ratings
Type: Book
ISBN: 978-0-44451-837-8

Open Access
Article
Publication date: 1 February 2022

Adewale Samuel Hassan and Daniel Francois Meyer

This study examines whether international tourism demand in the Visegrád countries is influenced by countries' risk rating on environmental, social and governance (ESG) factors…

5741

Abstract

Purpose

This study examines whether international tourism demand in the Visegrád countries is influenced by countries' risk rating on environmental, social and governance (ESG) factors, as non-economic factors relating to ESG risks have been ignored by previous researches on determinants of international tourism demand.

Design/methodology/approach

The study investigates panel data for the Visegrád countries comprising the Czech Republic, Hungary, Poland and Slovakia over the period 1995–2019. Recently developed techniques of augmented mean group (AMG) and common correlated effects mean group (CCEMG) estimators are employed so as to take care of cross-sectional dependence, nonstationary residuals and possible heterogeneous slope coefficients.

Findings

The regression estimates suggest that besides economic factors, the perception of international tourists regarding ESG risk is another important determinant of international tourism demand in the Visegrád countries. The study also established that income levels in the tourists' originating countries are the most critical determinant of international tourism demand to the Visegrád countries.

Originality/value

The research outcomes of the study include the need for the Visegrád countries to direct policies towards further mitigating their ESG risks in order to improve future international tourism demand in the area. They also need to ensure exchange rate stability to prevent volatility and sudden spikes in the relative price of tourism in their countries.

Details

Journal of Tourism Futures, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2055-5911

Keywords

Article
Publication date: 1 May 1992

John C. Groth

Gives a brief background to risk evaluation methods and measures.Offers a simple definition of risk which may be useful to the managers.Examines risk issues relative to the…

Abstract

Gives a brief background to risk evaluation methods and measures. Offers a simple definition of risk which may be useful to the managers. Examines risk issues relative to the statement of income, which allows a review of factors contributing to risk. Categorizes the origins of risk. Finally, provides a practical analysis and scoring system to help the analyst and manager assess risk, make decisions and manage in a risky environment.

Details

Management Decision, vol. 30 no. 5
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 1 January 2014

Raistrick W. Turton

Challenging behaviours are defined in part by the risks of harm they present and the support of individuals who challenge would be improved with effective assessments of the risks

Abstract

Purpose

Challenging behaviours are defined in part by the risks of harm they present and the support of individuals who challenge would be improved with effective assessments of the risks posed by challenging behaviours. The purpose of this paper is to outline a model of risk assessment and review literature that provides relevant information.

Design/methodology/approach

Literature review.

Findings

Forensic risk assessment has a well worked-out and validated approach but tools used to assess challenging behaviours are not effective risk predictors. Applied Behaviour Assessment provides methods that can be more effectively used for risk assessment.

Practical implications

There is a need to develop valid risk assessment procedures for assessing the risks presented by challenging behaviours.

Originality/value

This is a fresh perspective on risk assessment in relation to challenging behaviours.

Details

Advances in Mental Health and Intellectual Disabilities, vol. 8 no. 1
Type: Research Article
ISSN: 2044-1282

Keywords

Article
Publication date: 17 October 2018

Ting-Kwei Wang, David N. Ford, Heap-Yih Chong and Wei Zhang

Delays during construction are one of the common scenarios in the construction industry. The purpose of this paper is to identify the primary causes of delays in the construction…

1826

Abstract

Purpose

Delays during construction are one of the common scenarios in the construction industry. The purpose of this paper is to identify the primary causes of delays in the construction phase of building construction projects in China.

Design/methodology/approach

Questionnaire survey approach was adopted across the four typical cities in China, namely, Beijing, Shanghai, Chongqing and Shenzhen. In total, 115 sets of valid responded questionnaires were collected and analyzed.

Findings

The results show that the causes of variations, delays in progress payments, exceptionally low bids and subcontractors’ poor performance and communication issues were the most important causes of delays in China.

Originality/value

This research is the first questionnaire survey on the causes of delays in the construction phase of building construction projects in China. The comparative analysis shows two unique causes of delays in the Chinese construction industry, such as “difficulty in claiming indemnity” and “unreasonable upfront capital demanded by client.” It also reveals different ranked causes of delays as per distinguished political and economic situations in China. The research findings can be referred by construction projects in other countries that are funded or partnered with China.

Details

Engineering, Construction and Architectural Management, vol. 25 no. 11
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 4 February 2020

Cay Oertel, Jonas Willwersch and Marcelo Cajias

The purpose of this study is to introduce a new perspective on determinants of cross-border investments in commercial real estate, namely, the relative attractiveness of a target…

Abstract

Purpose

The purpose of this study is to introduce a new perspective on determinants of cross-border investments in commercial real estate, namely, the relative attractiveness of a target market. So far, the literature has analyzed only absolute measures of investment attractiveness as determinants of cross-border investment flows.

Design/methodology/approach

The empirical study uses a classic ordinary least squares estimation for a European panel data set containing 28 cities in 18 countries, with quarterly observations from Q1/2008 to Q3/2018. After controlling for empirically proven explanatory covariates, the model is extended by the new relative measurement based on relative yields/cap rates and relative risk premia. Additionally, the study applies a generalized additive mixed model (GAMM) to investigate a potentially nonlinear relationship.

Findings

The study finds on average a ceteris paribus, statistically significant lagged influence of the proxy for relative attractiveness. Nonetheless, a differentiation is needed; relative risk premia are statistically significant, whereas relative yields are not. Moreover, the GAMM confirms a nonlinear relationship for relative risk premia and cross-border transaction volumes.

Practical implications

The results are of interest for both academia and market participants as a means of explaining cross-border capital flows. The existing knowledge on determinants is expanded by relative market attractiveness, as well as an awareness of nonlinear relationships. Both insights help to comprehend the underlying transaction dynamics in commercial real estate markets.

Originality/value

Whereas the existing body of literature focuses on absolute attractiveness to explain cross-border transaction activity, this study introduces relative attractiveness as an explanatory variable.

Details

Journal of European Real Estate Research , vol. 13 no. 1
Type: Research Article
ISSN: 1753-9269

Keywords

Article
Publication date: 29 April 2014

Feng Wu, Zhengfei Guan and Robert Myers

– The purpose of this paper is to provide a unified theoretical framework that explains farm capital structure choice.

1077

Abstract

Purpose

The purpose of this paper is to provide a unified theoretical framework that explains farm capital structure choice.

Design/methodology/approach

The framework accommodates different credit access scenarios and heterogeneous risk profiles of borrowers. It recognizes that the costs of capital are endogenously determined, reflecting the degree of credit risk and accessibility to credit markets. Based on the proposed model and the comparative statics derived thereof, the paper empirically tests the impacts of different factors on capital structure choice.

Findings

Based on the theoretical framework, the paper derived the impacts of different factors on capital structure choice using comparative statics. Results suggest that the potential determinants of capital structure have varying effects at different ranges of leverage. Empirical evidence supports the theoretical model.

Originality/value

Despite all of previous work on various aspects of farm capital structure choice, a framework that encompasses each of the different assumptions and scenarios is still lacking. The theoretical model integrates credit risk models and accommodates endogenous cost of capital, providing a comprehensive framework for studying farm capital structure choice and its determinants. The results provide insights that could help policy makers and lenders develop effective instruments to manage, monitor, and influence the financial leverage of farms at different quantiles of debt ratio.

Details

Agricultural Finance Review, vol. 74 no. 1
Type: Research Article
ISSN: 0002-1466

Keywords

Book part
Publication date: 15 September 2017

J. Huston McCulloch

Mehra and Prescott (1985) point out that it is difficult to reconcile certain empirical facts about equity and debt returns and the process of consumption growth with reasonable…

Abstract

Mehra and Prescott (1985) point out that it is difficult to reconcile certain empirical facts about equity and debt returns and the process of consumption growth with reasonable assumptions about the relative rate of risk aversion and the pure rate of time preference, in a conventional infinite-horizon model with an additively separable, constant relative rate of risk aversion (CRRA) utility function. The present note adds the further puzzle that if the mean rate of growth of consumption is not known with perfect certainty in such a model, both stocks and real perpetuities have an infinite price in terms of consumption goods. When maturity-specific claims on real output are introduced, the equity premium is seen to increase without bound at the most distant horizons. These in turn dominate asset pricing, so that the equity premium on claims on all future output is indeed infinite.

Details

Advances in Pacific Basin Business Economics and Finance
Type: Book
ISBN: 978-1-78743-409-7

Keywords

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