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The Impact of Country-Specific Variables on the Relationship between Financial Ratios and Bank Credit Ratings
Journal of Financial Studies
View Archive Info| Field | Value | |
| Title |
The Impact of Country-Specific Variables on the Relationship between Financial Ratios and Bank Credit Ratings
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| Creator |
Yu-Li Huang
Chung-Hua Shen |
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| Description |
Why do banks with similar financial ratios have different ratings in different countries? We employ the data of S P's long-term ratings on 2,321 commercial banks in 77 countries during the period of 2002-2006. We propose a quality-enhancing hypothesis and posit when a bank is in a high-income country, in a better region and in a country characterized with strong government governance, the financial ratios are more likely to reflect the intrinsic value of a bank. Accordingly, less asymmetric information exists between rating agencies and banks. Thus, rating agencies give higher weights to financial ratios in these countries. Results are consistent with our hypothesis. We also find higher capital adequacy ratio can enhance bank credit ratings in less-developed countries. Keywords:credit rating, financial ratio, ordered probit model, information asymmetry, country-specific variables. |
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| Publisher |
Journal of Financial Studies
財務金èžå¸åˆŠ |
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| Date |
2011-06-30
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| Type |
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| Format |
application/pdf
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| Identifier |
http://www.jfs.org.tw/index.php/jfs/article/view/2011198
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| Source |
Journal of Financial Studies; Vol 19, No 2 (2011); 37
財務金èžå¸åˆŠ; Vol 19, No 2 (2011); 37 |
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| Language |
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