Country Risk and Its Effect on International Finance management

Abstract

The purpose of this study was to show the effect of current country risk on international finance. The findings of this exploratory study shows that country risk considerably affect the operations of international finance but this correlation cannot be stated with sufficient level of confidence. Data and analysis of the study give us a notion that there are effects of country risk on international finance and that effect is negatively correlated that means when the country risk tends to be higher as in turn making the country rating lower, the international finance is negatively affected. In contrary, when the country risk is lower giving a higher country rating, international finance is positively affected. The result shown gives us perception that due to political instability, high interest rate, high inflation rate, and frequently volatile currency exchange rate cause disturbance in the normal operations of the international trade that reduce the country risk rating score and in turn the global international finance gets hampered.