Study On Credit Risk Of China's Listed Companies In Manufacturing Industry

Manufacturing industry is still the pillar industry in China in the 21th century, and it is the base of the state economy. After the beginning of the reform and opening up, China has achieved a consecutive development more than 30 years, which makes China a great nation in the manufacturing industry. But there is still a big gap between China and other dominant countries in the world. The global economic crash affected the real economy of China badly in 2008, and it affected the manufacturing industry of China double; namely, much more difficulty was raised in the manufacturing industry of China, and the manufacturing industry upgrading was pushed more. Meanwhile, this also propels the development of manufacturing industry positively, which provides the requirements for the upgrading of manufacturing industry. Commercial banks support the Continuity & Development of the manufacturing industry for a long time past. But the credit risk of the manufacturing industry during the economic crash induced a great mount of bad debts in the commercial banks. The development of commercial banks and state economy will speed up if the credit risk of the manufacturing companies can be evaluated correctly and give full play to the positive effect of banks. Based on the fact of manufacturing companies of China, and based on the theory of credit risk measurement and management, this thesis studies the credit risk of the manufacturing companies profoundly, and analyzes the method for credit risk measurement and management.The theoretic analysis and empirical research are coupled in this thesis. First, the definition and current situation of the manufacturing industry are discussed, and a study and summarization of literature research is proposed, and the selection and construction of predictive model for the credit risk of the manufacturing industry is analyzed based on the fundamental theory of credit risk. And then, an empirical research is carried out based on the manufacturing companies of China, and the KMV model is used to evaluate the credit risk of 46 listed companies in China. Finally, a conclusion is following: The KMV model is suitable in the research of credit risk of the listed companies in China, and based on the default point resulted from empirical research and the growing rate of the value of an asset, the modified distance to default is reached and it can well distinguish the ST and outstanding performing listed companies; and the modified model can reach better result comparing with that of conventional model. The modified model provided a more effective tool for commercial bank to analyze the credit risk of listed companies in the manufacturing industry in China.In most of the researches on credit risk carried out by the scholar in China, the KMV model is relative with the whole stock market of China, and a few of the research are carried out based on the default level of a certain industry. But the research on the evaluation of manufacturing industry is more based mainly on the manufacturing industry and using the historical finance report data. A few researchers evaluate the credit risk of manufacturing industry using the market price of listed companies in the manufacturing industry. Based on the previous study, two innovational works are carried out in this study: First, with the listed companies as the object, this study considers the credit risk of commercial banks due to financial distress of the companies in manufacturing industry; second, the two parameters in the KMV model are corrected at the same time to improve the accuracy of the measurement of credit risk.