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Assessing risks in international investments using hesitant fuzzy linguistic term sets

Author

Listed:
  • Basar, Ayfer

    (Istanbul Technical University, Industrial Engineering Department, Turkey)

Abstract

The world economy, global markets and competition for international investments have undergone great change in recent years. Changes in the economy of a society affect many countries as a result of international commerce and agreements with other countries. This has given rise to many risks that governments have to deal with; hence, the importance of risk management has increased for all countries, especially in the finance sector. Global economics means that financial institutions need to make decisions about investment in other countries (eg opening a new bank branch or a participation company), so they need to measure the financial risks of candidate countries in fuzzy conditions. This study presents a novel method to meet that need. First, the most common financial risks are determined by means of a literature survey and consulting expert opinion. Secondly, the relative weight of each main and sub-risk is determined by expert opinion and hesitant fuzzy linguistic term sets (HFLTS). These weights are used to measure the financial risks of 30 countries to select the best four and the results are approved by the experts. Finally, the proposed method is implemented to aid the investment decision of a large financial institution. This paper proposes a new method to assess financial risks in fuzzy conditions.

Suggested Citation

  • Basar, Ayfer, 2023. "Assessing risks in international investments using hesitant fuzzy linguistic term sets," Journal of Risk Management in Financial Institutions, Henry Stewart Publications, vol. 16(1), pages 79-91, January.
    • Handle: RePEc:aza:rmfi00:y:2023:v:16:i:1:p:79-91
    as

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    More about this item

    Keywords

    financial institutions; investment decisions; risk management; hesitant fuzzy linguistic term sets; case study;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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