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Country-Risk Assessment System in Banks: Patterns and Performance

Author

Listed:
  • Briance Mascarenhas

    (Rice University)

  • Ole Christian Sand

    (UCLA)

Abstract

The country-risk assessment function in U.S. banks has risen in importance with the recent growth in international lending. This paper, which is based on a field study of 50 U.S. banks, identifies 4 common organizational types of country-risk assessment, probes their strengths and weakness, examines their determinants, and analyzes the importance of organizational and technical development to various dimensions of system performance.The findings of the study suggest that banks move to more organizationally sophisticated country-risk assessment systems 1) with time as they accumulate experience in the assessment function, 2) with the increasing absolute size of their foreign loan portfolio, and 3) with the growth in relative importance of their international activities to the activities of the firm as a whole. Systems with an independent staff pre-investment audit were found to have a better performance than those where only the line country-manager made the assessment. It is important, however, that the independent staff assessment unit be integrated with the organization.© 1985 JIBS. Journal of International Business Studies (1985) 16, 19–35

Suggested Citation

  • Briance Mascarenhas & Ole Christian Sand, 1985. "Country-Risk Assessment System in Banks: Patterns and Performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 16(1), pages 19-35, March.
    • Handle: RePEc:pal:jintbs:v:16:y:1985:i:1:p:19-35
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    Citations

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    Cited by:

    1. Hagigi, Moshe & Sivakumar, Kumar, 2009. "Managing diverse risks: An integrative framework," Journal of International Management, Elsevier, vol. 15(3), pages 286-295, September.
    2. Somerville, R. A. & Taffler, R. J., 1995. "Banker judgement versus formal forecasting models: The case of country risk assessment," Journal of Banking & Finance, Elsevier, vol. 19(2), pages 281-297, May.
    3. Alin Opreana & Simona Vinerean & Diana Marieta Mihaiu & Liliana Barbu & Radu-Alexandru Șerban, 2023. "Fuzzy Analytic Network Process with Principal Component Analysis to Establish a Bank Performance Model under the Assumption of Country Risk," Mathematics, MDPI, vol. 11(14), pages 1-38, July.

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