Political Risk in Credit Evaluation: Empirical Studies and Survey Results

Financing trade between economic agents located in different countries is affected by many types of risks, resulting from incomplete information about the debtor, the problems of enforcing international contracts, or the prevalence of political and financial crises. Trade is important for economic development and the availability of trade finance is essential, especially for developing countries. Relatively few studies treat the topic of political risk, particularly in the context of international lending. This thesis explores new ground to identify links between political risk and international debt defaults. The core hypothesis of the study is that the default probability of debt increases with increasing political risk in the country of the borrower. The thesis consists of three essays that support the hypothesis from different angles of the credit evaluation process. The first essay takes the point of view of an international lender assessing the credit risk of a public borrower. The second investigates creditworthiness assessment of companies. The obtained results are substantiated in the third essay that deals with an extensive political risk survey among finance professionals in developing countries. The financial instruments of core interest are export credit guaranteed debt initiated between the Export Credit Agency of Finland and buyers in 145 countries between 1975 and 2006. Default events of the foreign credit counterparts are conditioned on country-specific macroeconomic variables, corporate-specific accounting information as well as political risk indicators from various international sources. Essay 1 examines debt issued to government controlled institutions and conditions public default events on traditional macroeconomic fundamentals, in addition to selected political and institutional risk factors. Confirming previous research, the study finds country indebtedness and the GDP growth rate to be significant indicators of public default. Further, it is shown that public defaults respond to various political risk factors. However, the impact of the risk varies between countries at different stages of economic development. Essay 2 proceeds by investigating political risk factors as conveivable drivers of corporate default and uses traditional accounting variables together with new political risk indicators in the credit evaluation of private debtors. The study finds links between corporate default and leverage, as well as between corporate default and the general investment climate and measeures of conflict in the debtor country. Essay 3 concludes the thesis by offering survey evidence on the impact of political risk on debt default, as perceived and experienced by 103 finance professionals in 38 developing countries. Taken together, the results of the thesis suggest that various forms of political risk are associated with international debt defaults and continue to pose great concerns for both international creditors and borrowers in developing countries. The study provides new insights on the importance of variable selection in country risk analysis, and shows how political risk is actually perceived and experienced in the riskier, often lower income countries of the global economy.

Associations among working conditions and behavioral risk factors : The Helsinki Health Study with International Comparisons

Adverse health behaviors as well as obesity are key risk factors for chronic diseases. Working conditions also contribute to health outcomes. It is possible that the effects of psychosocially strenuous working conditions and other work-related factors on health are, to some extent, explained by adverse behaviors. Previous studies about the associations between several working conditions and behavioral outcomes are, however, inconclusive. Moreover, the results are derived mostly from male populations, one national setting only, and with limited information about working conditions and behavioral risk factors. Thus, with an interest in employee health, this study was set to focus on behavioral risk factors among middle-aged employees. More specifically, the main aim was to shed light on the associations of various working conditions with health behaviors, weight gain, obesity, and symptoms of angina pectoris. In addition to national focus, international comparisons were included to test the associations across countries thereby aiming to produce a more comprehensive picture. Furthermore, a special emphasis was on gaining new evidence in these areas among women. The data derived from the Helsinki Health Study, and from collaborative partners at the Whitehall II Study, University College London, UK, and the Toyama University, Japan. In Helsinki, the postal questionnaires were mailed in 2000-2002 to employees of the City of Helsinki, aged 40 60 years (n=8960). The questionnaire data covered e.g., socio-economic indicators and working conditions such as Karasek s job demands and job control, work fatigue, working overtime, work-home interface, and social support. The outcome measures consisted of smoking, drinking, physical activity, food habits, weight gain, obesity, and symptoms of angina pectoris. The international cohorts included comparable data. Logistic regression analysis was used. The models were adjusted for potential confounders such as age, education, occupational class, and marital status subject to specific aims. The results showed that working conditions were mostly unassociated with health behaviors, albeit some associations were found. Low job strain was associated with healthy food habits and non-smoking among women in Helsinki. Work fatigue, in turn, was related to drinking among men and physical inactivity among women. Work fatigue and working overtime were associated with weight gain in Helsinki among both women and men. Finally, work fatigue, low job control, working overtime, and physically strenuous work were associated with symptoms of angina pectoris among women in Helsinki. Cross-country comparisons confirmed mostly non-existent associations. High job strain was associated with physical inactivity and smoking, and passive work with physical inactivity and less drinking. Working overtime, in turn, related to non-smoking and obesity. All these associations were, however, inconsistent between cohorts and genders. In conclusion, the associations of the studied working conditions with the behavioral risk factors lacked general patters, and were, overall, weak considering the prevalence of psychosocially strenuous work and overtime hours. Thus, based on this study, the health effects of working conditions are likely to be mediated by adverse behaviors only to a minor extent. The associations of work fatigue and working overtime with weight gain and symptoms of angina pectoris are, however, of potential importance to the subsequent health and work ability of employees.

The effects of marriage partners' socio-economic positions on the risk of divorce in Finland

Väitöskirjatutkimuksen tavoitteena oli selvittää, miten aviopuolisoiden sosioekonominen asema vaikuttaa avioeroriskiin Suomessa. Tutkimuksessa käytettiin Tilastokeskuksen rekistereistä koottua aineistoa, joka koskee suomalaisten ensimmäisiä avioliittoja vuoden 1990 lopussa ja avioeroja vuosina 1991−93. Väitöskirjaan sisältyy kolme osatutkimusta. Ensimmäinen osatutkimus käsitteli avioeroriskin vaihtelua aviopuolisoiden sosioekonomisen aseman eri osatekijöiden (koulutusaste, sosiaaliryhmä, pääasiallinen toiminta, tulotaso, asunnon omistaminen ja asumisahtaus) mukaan. Kaiken kaikkiaan avioeroriski oli sitä pienempi, mitä paremmassa taloudellisessa ja sosiaalisessa asemassa aviopuolisot olivat. Esimerkiksi miehen ja vaimon korkea koulutusaste, toimihenkilöammatti, työssäkäynti (etenkin verrattuna työttömyyteen) sekä omistusasunnossa asuminen liittyivät pienentyneeseen avioeroriskiin. Vaimon sosioekonomisen aseman yhteys avioeroriskiin oli paljolti samanlainen kuin miehen aseman yhteys. Huomattavin poikkeus tähän oli, että vaimon suuret tulot lisäsivät avioeroriskiä, vaikka miehen suurilla tuloilla oli päinvastainen vaikutus. Lisäksi kotitaloustyötä pääasiallisena toimintanaan tekevillä naisilla (pääasiallisen toiminnan luokka ”muut”) oli vielä pienempi avioeroriski kuin työssäkäyvillä naisilla. Toisessa osatutkimuksessa keskityttiin aviomiehen ja vaimon aseman yhdistettyyn vaikutukseen. Selviä viitteitä siitä, että puolisoiden koulutustasojen erilaisuus lisäisi eroriskiä, ei saatu. Pareilla, joissa molemmilla oli enintään perusasteen koulutus, oli kuitenkin odotettua pienempi avioeroriski. Eroriski oli suhteellisen alhainen pareilla, joissa vaimo oli työssäkäyvä tai kotitaloustyötä tekevä ja aviomies työssäkäyvä. Eroriskiä kasvatti se, että aviomies, vaimo tai molemmat puolisot olivat työttömiä. Vaimon korkea tulotaso lisäsi eroriskiä miehen kaikilla tulotasoilla mutta erityisen voimakkaasti silloin, kun miehen tulotaso oli alhainen. Kolmanneksi selvitettiin, vaikuttaako puolisoiden sosioekonominen asema avioeroriskiin eri tavalla riippuen siitä, kauanko avioliitto on kestänyt. Tällöin havaittiin, että vähän koulutettujen ja työntekijäammateissa toimivien puolisoiden suuri eroriski rajoittuu paljolti nuorimpiin avioliittoihin. Sen sijaan esim. puolisoiden työttömyys, vaimon korkea tulotaso ja vuokra-asunnossa asuminen kasvattivat eroriskiä riippumatta siitä, kuinka kauan avioliitto oli kestänyt. Kaiken kaikkiaan eroriski oli siis sitä pienempi, mitä paremmassa taloudellisessa ja sosiaalisessa asemassa puolisot olivat. Vaimon taloudellisilla ja sosiaalisilla resursseilla näyttää kuitenkin olevan myös joitakin avioeroriskiä lisääviä vaikutuksia.

The potential of microbial ecological indicators to guide ecosophisticated management of hydrocarbon-contaminated soils

Soil is an unrenewable natural resource under increasing anthropogenic pressure. One of the main threats to soils, compromising their ability to provide us with the goods and ecosystem services we expect, is pollution. Oil hydrocarbons are the most common soil contaminants, and they disturb not just the biota but also the physicochemical properties of soils. Indigenous soil micro-organisms respond rapidly to changes in the soil ecosystem, and are chronically in direct contact with the hydrophobic pollutants on the soil surfaces. Soil microbial variables could thus serve as an intrinsically relevant indicator of soil quality, to be used in the ecological risk assessment of contaminated and remediated soils. Two contrasting studies were designed to investigate soil microbial ecological responses to hydrocarbons, together with parallel changes in soil physicochemical and ecotoxicological properties. The aim was to identify quantitative or qualitative microbiological variables that would be practicable and broadly applicable for the assessment of the quality and restoration of oil-polluted soil. Soil bacteria commonly react on hydrocarbons as a beneficial substrate, which lead to a positive response in the classical microbiological soil quality indicators; negative impacts were accurately reflected only after severe contamination. Hydrocarbon contaminants become less bioavailable due to weathering processes, and their potentially toxic effects decrease faster than the total concentration. Indigenous hydrocarbon degrader bacteria, naturally present in any terrestrial environment, use specific mechanisms to improve access to the hydrocarbon molecules adsorbed on soil surfaces. Thus when contaminants are unavailable even to the specialised degraders, they should pose no hazard to other biota either. Change in the ratio of hydrocarbon degrader numbers to total microbes was detected to predictably indicate pollutant effects and bioavailability. Also bacterial diversity, a qualitative community characteristic, decreased as a response to hydrocarbons. Stabilisation of community evenness, and community structure that reflected clean reference soil, indicated community recovery. If long-term temporal monitoring is difficult and appropriate clean reference soil unavailable, such comparison could possibly be based on DNA-based community analysis, reflecting past+present, and RNA-based community analysis, showing exclusively present conditions. Microbial ecological indicators cannot replace chemical oil analyses, but they are theoretically relevant and operationally practicable additional tools for ecological risk assessment. As such, they can guide ecologically informed and sustainable ecosophisticated management of oil-contaminated lands.