Country Risk and Corruption

This book focuses on how the risk rating of a country may help to assess its corruption level. I¿ve investigated and compared country risk and corruption levels in two dynamic European transitional countries, namely Poland and the Czech Republic. A data analysis shows which country risk indicator better tracks the overall corruption level in the ECA region: the best agency out of five ( Fitch, Moody¿s, S&P¿s, EIU, ICRG) predicting better corruption within its country risk index ,in the period 2002-2005, results to be Fitch. I¿ve found that country risk, as measured by risk ratings, deteriorates as corruption increases.It follows from my estimates that an increase in country risk rating by a full rating category (i.e from BBB to A) has led to a raise of the overall corruption index by 2,574 unit which can be considered quite an high amount as the corruption scores of most central European transitional countries show a slighter difference among them.