Financial Crises and e-Commerce: How Are They Related

Abstract

The recent financial crisis unveiled the major deficiencies and weaknesses of the Eurozone structure. However, almost 10 years after the beginning of the crisis, the Eurozone is still dealing with its effects. E-Commerce, as an innovative way to do business, has been affected negatively since it is based mainly on credit. The article discusses some of the reasons of the global crises since the 1980’s and focuses on the role of the Credit Rating Agencies (“CRAs”) during the recent financial crisis. It presents the methodologies that are used in order to assess country risk, the relevant variables used in their evaluations, the problems they face and suggests possible ways to improve the process at a European level. At the same time, it discusses how the low country grade given by the CRAs redirects business activities in countries with higher grades. The article is organized in six sections as follows: the concept of country risk, platforms for assessing country risk, the determinants of country risk, the reasons behind the recent financial crises, the effect of a low grade to e-commerce and the role of CRAs in the latest financial crisis.

Keywords: Financial Crisis, Country Risk, e-Commerce, Internationalization

JEL Classification: G1, G14