Research On Country Risk And Sovereign Credit Rating

The sovereign rating of United States was dramatically downgraded during these years, as aresult of the subprime crisis which brought a heavy burden to the government fiscal budget andpressure to the Treasury bond repayment schedule. When look into the causation of Europeansovereign debt crisis, we find that the crisis is resulted from the distress of government debt risensubstantially in few Eurozone countries. Such distress explodes against the background of highdeficit rate and imbalance of economic recovery among European Union. As followed, worsenedsovereign ratings make it more difficult or impossible for the problem countries to refinance theirgovernment debt from the monetary market. One narrative describing, the European sovereigndebt crisis not only affects the stability of euro zone economy, but also brings a negative impact toglobal economy. From the modern point of view of the financial crisis theory research anddevelopment, the Asian financial crisis of1997has attracted the theoretical circles on the nationalbalance sheet attention. The two crises reveal the main sectors of the economy of a sovereign statein the asset liability mismatch problem. Therefore, the identification of a sovereign state anddepartments of various fault in the balance sheet, such as the maturity mismatch, capital structuremismatch and currency mismatch, for crisis prevention, has the extremely vital significance tomaintain financial stability. At the same time, the relationship between the main sectors of theeconomy on the balance sheet, also analyzes the crisis transmission path in the economicdepartments, provide the basis for government to formulate a policy of economic adjustment.From the perspective of Chinese economy development, it has maintained rapid growth.China is facing with the problem of structural adjustment of economy and improvement of theforeign assets management ability now. And, the international credit rating institutions or agencieskeep playing an important role in Chinese economy during Chinese Reform and Opening. It isstrategically meaningful to establish a completed, self-independent credit rating system and buildup a comprehensive country risk management system in order to stimulate Chinese economydevelopment and safetyUnder the guidance of structurally economic paradigm, this article explains how information,during the development of globalization and fictitious economy, influences the country risk andresult of credit risk rating. From the view of society, the article explicates the ways that Informatization alters the traditional society form and characteristics, as well as the evolution path.The interconnection between the forces of Informatization and finance system not only creates anew economic paradigm, but also stimulates country risk to change in a different way.Therefore, the purpose of the article is to identify contributing factors respectively of countryrisk, the finance function of credit risk rating, information and informatization society, theevolution path of fictitious economy. Also, it discusses the problems occurred in the establishmentof country risk management mechanism in the Chinese finance institutions and the involvement ofinternational credit risk rating system to such mechanism. Given the complexity naturally bornwith the country risk, the article carries out the research in line with the influence ofinformatization society on the country risk. The research applies theories of information, politicaleconomy and institution economics, and their relevant methodologies. Basing on the finding, thearticle firstly gives explanation to the forming mechanism of country risk as well as itscomplicated characteristics; secondly, the determinants of the transmission mechanism ofinformation; thirdly, the influences that country risks and information bring to the marketfunctioning systems. Meanwhile, via comparison to the problems existing in the internationalcredit rating systems, the article gives some suggestions to build up a comprehensive andindependent country risk management system.