Risk Management In Developing Countries: Evidence From Multinational And Country Financial Risk Analysis

Abstract

Much better access to international financial markets has granted many benefits to developing countries, but at the same time this approach has also exposed them to the unpredictable changes of these markets.  However, the amount that can be hedged is limited because the other parties are usually given a ceiling to the total debt that they can get into with another country.  Unlike borrowers, developing countries have limited possibilities of exploiting market niches to develop their investor base. The objective of this research paper is to look at different countries such as Russia and Mexico, and also realize how economic, political, and social risks account for these developing countries foreign and public debts; and how the management of these risks are necessary to combat the overall exposures these countries come across. With a fiscal view the primary cause of monetary growth in developing economies is usually found in large financial imbalances.  The effect of inflation itself on the actual value of these countries financial deficits indicates the link between fiscal deficits, money growth, and inflation.