Central European Business Review 2022, 11(2):61-79 | DOI: 10.18267/j.cebr.288

The Impact of Institutional Environment on Risk Assessment

Dušan Steinhauser ORCID...1, Zuzana Borovská2
1 University of Economics in Bratislava, Faculty of Commerce, Department of International Trade, Bratislava, Slovakia, dusan.steinhauser@euba.sk
2 University of Economics in Bratislava, Faculty of Commerce, Department of International Trade, Bratislava, Slovakia, zuzana.borovska@euba.sk

The purpose of this research is to investigate the relationship between the institutional environment of the studied countries and the Coface Country Risk Assessment. To meet this object, we used quantitative methods in the form of descriptive and regression analysis. The result was an evaluation of the actual Coface Country Risk Assessment and its value prediction for chosen countries. The authors quantified the impact of the institutional environment using The Heritage Index of Economic Freedom subindexes on the risk assessment indicator of the major private insurance company Coface, which is not so often used in the scientific sphere and is regularly updated. The results suggest a positive correlation between the Coface Country Risk Assessment and Government Integrity, Fiscal Health, Financial Freedom and Property Rights. Although Tax Burden is a statistically significant factor, its parameter was detected with an unexpected sign. For this reason, authors abstracted from it. Subindexes Government Spending, Business Freedom, Monetary Freedom, Trade Freedom, and Investment Freedom were statistically insignificant. Control variable Public Debt as a share of gross domestic product was insignificant as well.
Implications for Central European audience: The article applies the Coface Country Risk Assessment, which has so far been rarely used in the scientific literature. We present the current and predicted values of the Central European Countries, but also the countries interesting from their point of view due to trade and investment opportunities. Many countries, including those in Central Europe, show differences between actual and predicted values.

Keywords: Coface Country Risk Assessment; institutional environment; economic freedom
JEL classification: C52, E02, G22, O50

Received: February 4, 2021; Revised: June 7, 2021; Accepted: June 25, 2021; Prepublished online: October 31, 2021; Published: May 19, 2022  Show citation

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Steinhauser, D., & Borovská, Z. (2022). The Impact of Institutional Environment on Risk Assessment. Central European Business Review, 11(2), 61-79. doi: 10.18267/j.cebr.288
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