The Comparative Study Of Different Regions' Credit Risk By The Use Of KMV Model

The credit risk plays an even important role in people's life,it impacts not only on consumption but also on investment, therefore how to manage it is becoming one of a hot spot in research community. In just a few decades, the measurement of credit risk experience a process which is from qualitative to quantitative, from simple to complex, from linear structure to multi-system collaboration, and it is becoming more and more accurate and diverse.As the increasing scope of credit risk affects, keep trying new application of credit risk's measure model becomes an inevitable choice. While the listed company's credit risk in different regions'also weighted heavier when people do some investments:location, the level of economic development, people resources and industry cluster and so on, affect a listed company's credit risk of a region, then ROI of investments. Therefore, comparing the level of credit risk of different region's listed company can provide more reference value for people's investment, the comparison of listed company's credit risk in different regions becomes a new application trial of credit risk's measure model. In this paper, we adopt KMV model, which is commonly used model by the domestic scholars to measure credit risk, to make a comparative research of listed companies'credit risk in different regions. The article verifies the comparison of listed company's credit risk in different regions is significance and feasibility firstly, then uses the financial data and market transaction data of domestic listed companies to calculate the default distance for each one company sample, and further to obtain the average default distance for every region's listed company, which reflects the profile of listed company's credit risk in different regions. The results indicated that the eastern regions'listed companies have the lowest credit risk, followed by the central regions and the western regions'listed companies have the worst credit risk profile. The reality of different proportion that ST companies account in all listed companies of various regions also verified the conclusions reasonable. The comparison of company's credit risk in different regions'makes the KMV model finds new applications point, and provide more reference value for investment.