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An Empirical Economic Development Based Model of International Banking Risk and Risk Scoring
Author(s) -
Simpson John
Publication year - 2002
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/1467-9361.00143
Subject(s) - proxy (statistics) , economics , country risk , per capita income , international banking , external debt , debt , income elasticity of demand , industrialisation , per capita , macroeconomics , financial system , econometrics , market economy , population , demography , machine learning , sociology , computer science
The paper reconsiders the relationship between international banking risk and economic development. It is shown quite conclusively that the significant explanatory variables of international banking risk scores (when international banking risk is used as a proxy for country risk) are the income elasticity of demand for imports (when the latter is used as an indicator of economic growth and development), the phase of industrialization (based on country per capita income), and certain historical economic and financial variables (external debt levels and international bank size according to total assets). The investigation arrives at a new approach to risk scoring systems and models.