Study On China's Credit Rating--The Enlightenment From Subprime Crisis

The U.S subprime crisis which has lasted for almost 3 years is not the worst crisis in the world but it impacted the world economic most in terms of the number of related countries.The U.S real estate market decreased its speed with the increasing interest rate from 2004 to 2006. In the third quarter 2006, the national real estate sales dropped dramatically, non-performing loans increased significantly and the default rate of subprime loans surged. With the default rate surged dramatically, huge number of securities which based on subprime loans devaluated heavily. A lot of international financial companies went bankrupt in the crisis and real economy was impacted over the world.A disaster has inevitability and chance. So we should consider the key reasons why the disaster happened. The author believes that rating agency played a very important role in the crisis.The thesis introduces some basic concepts related to rating agency at the beginning. Then it describes the whole process of the subprime crisis and points out the role which rating agency played in the crisis. Through analysis Chinese rating industry, rating agencies and rating mode, it points out the demerits of Chinese rating system. Lastly it makes some suggestion about how to improve the rating agencies and which mode we should adopt in the development of rating system.