How to Avoid Financial Crises

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.The article discusses some of the reasons of the global crises since the 1980s 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.The article is organized in five 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 and the role of CRAs in the latest financial crisis.