The Financial Variables on the Impact of Credit Rating: A Study of Financial Holding Companies in Taiwan

• Main Authors: Cherry Huang, 黃秋宜
• Other Authors: Dr. GOO, YEONG-JIA
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/68211714133223045800

碩士 === 國立臺北大學 === 國際財務金融碩士在職專班 === 98 === Recently, the international financial environment has suffered from continuous unprecedented financial crisis. Investors have high uncertainty to the future of investment environment. Referring to public information, many well-known credit rating companies also provides credit rating information to investors, but what exactly financial variables will affect the credit rating, and how? Therefore, this study will base on financial holding companies in Taiwan as example to discuss how the financial variables will impact credit ratings. The research sample adopted the data from 10 domestic financial holding companies (or banks), and the study period is from March 2005 to September 2009 quarterly data. We use the factor analysis and stepwise regression analysis to extract some financial variables which are more influence to the credit rating. And we get some conclusions as following: 1. Using factor analysis method can extract the seven financial indicators which are: earning power index, safety power index, the indicators of capital adequacy index, portfolio index, growing power index, liquidity index, and efficiency index. When earning power index increase, credit rating will subsequently improve; when safety power index rise, the credit rating will drop. In other words, when debt ratio is too high that will lower the credit rating. When efficiency index increase, the credit rating will rise. It means that total assets will rise, and will improve the credit rating. When portfolio index increase, the credit rating will rise. That means when the earnings per share increase, the credit rating will drop; when the indicators capital adequacy index grow, will not result in decreased credit rating; when the liquidity index increases, the credit rating will fall. It means that the lending ratio is relatively over the deposit ratio, making the credit ratings down; when growing power index increases, the credit rating will rise. 2. Using stepwise regression analysis screen out 13 financial variables which are more influence to the credit rating. There are 5 financial variables which negatively correlated to credit rating are gross profit margin, lending ratio, deposit ratio, financial services cost rate, total net turnover. There are 8 financial variables which positively correlated to credit rating are net profit margin, interest receivable and loan rates, ratio of total liabilities and total net, ratio of land and total net.