Companies Credit Risk Assessment Methods for Investment Decision Making

Peškauskaitė, Dovilė; Jurevičienė, Daiva

doi:10.3846/mla.2017.1014

Cited by 2 publications

(1 citation statement)

References 14 publications

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“…This work also draws partially on work from the field of bank ratings (King, Ongena, & Tarashev, 2011). This article also rests on the field of credit risk assessment (Peškauskaitė & Daiva, 2017) and the influence of capital flows on the credit ratings of developing countries (Setty & Dodd, 2003).…”

Section: Literature Reviewmentioning

confidence: 99%

The relationship between sovereign credit rating and trends of macroeconomic indicators

Kotěšovcová

Mihola

Budinský

2019

Investment Management and Financial Innovations

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The sovereign credit rating provides information about the creditworthiness of a country and thereby serves as a tool for investors in order to make right decisions concerning financial assets worth investments. Thus, determination of a sovereign credit rating is a highly complex and challenging activity. Specialized agencies are involved in rating assessment. So, it’s essential to analyze the efficiency of their work and seek out easily accessible tools for generating assessments of such ratings. The objective of this article is to find out whether sovereign credit rating can be reliably estimated using trends of selected macroeconomic indicators, despite the fact that sovereign credit rating is most likely influenced by non-economic factors. This can be used for strategic considerations at national and multinational levels. The relationships between sovereign credit rating and the trends of macroeconomic indicators were examined using statistical methods, linear multiple regression analysis, cumulative correlation coefficient, and multicollinearity test. The data source used is comprised of selected World Bank indicators meeting the conditions of completeness and representativeness. The data set has shown a cumulative correlation coefficient value greater than 95%, however at 100% multicollinearity. This is followed by the gradual elimination of indicators, but even this did not allow achieving acceptable values. So, the conclusion is that rating levels are not explainable solely by the trends of economic indicators, but other influences, e.g. political. However, the fact that the statistical model yielded acceptable results for five and fewer indicators allowed a regression equation to be found that gives good estimates of a country’s rating. This allows, for example, predicting of ratings relatively easy by forecasting the development of selected macroeconomic indicators.

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Section: Literature Reviewmentioning

confidence: 99%

The relationship between sovereign credit rating and trends of macroeconomic indicators

Kotěšovcová

Mihola

Budinský

2019

Investment Management and Financial Innovations

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Financial Risk Assessment: Case of „Lietuvos Geležinkeliai“, AB

Skvarciany

Germanaitė

2019

Open Economics

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This research paper focuses on the analysis of the financial risk of Lietuvos geležinkeliai, AB (eng. Lithuanian Railways), which activities are passenger and freight transportation by rail. In order to assess the financial risk of the leading company areas of financial risk were identified and are as follows: liquidity risk, credit risk and market risk. However, due to limited access to statistics only financial report of the organisation were analysed and, hence, just liquidity and credit risk were investigated. Consequently, the limitation of the current research is that only two categories of financial risk were analysed. For the purpose of financial risk analysis, the key indicators of liquidity and credit risk were distinguished from the literature. The results showed that the biggest problem of the company is too small short-term assets and the profitability indicators, which were strongly influenced by net profit (loss).

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Companies Credit Risk Assessment Methods for Investment Decision Making

Cited by 2 publications

References 14 publications

The relationship between sovereign credit rating and trends of macroeconomic indicators

The relationship between sovereign credit rating and trends of macroeconomic indicators

Financial Risk Assessment: Case of „Lietuvos Geležinkeliai“, AB

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