Analysis Of Factors Impacting On The Credibility Of Credit Rating Agencies And Empirical Research

The credibility of credit rating agencies refers to the ability of credit rating agencies togain the trust of society, financing institutions and rating markets. In their character as aneutral and third-party intermediary, credit rating agencies provide information about thecredit risk of securities issuers and their securities, so they have a dual function of“information production” and “certifying agent”. Therefore, the credibility of credit ratingagencies has a far-reaching influence on the stability and development of a country’s capitalmarket.Since international credit rating market will usher in a pattern evolution in future andchina’s “Twelfth Five-Year” Planning Outline puts forward development planning foraccelerating the construction of multi-layered capital market system, this means that Chinesecredit rating industry will get a new development opportunity. How to enhance credit ratingagencies’ credibility in the increasingly intense global competitive market has become aserious problem urgently needing to be solved by financial regulators and credit ratingagencies. Therefore, systematically analyzing the influencing factors for the credibility ofcredit rating agencies, building a scientific and systematic evaluation system, and promotingthe enhancement of Chinese credit rating agencies’ credibility have a fairly importanttheoretical value and practical significance.This paper, by reviewing and combing the literatures at home and abroad, make anin-depth study on the features of credit rating agencies’ credibility. On the basis of a full andactual investigation, and proceeding from the internal environment and external environmentwith which the credit rating agencies are faced, a systematic analysis is made on the internaland external influence factors for the credibility of Chinese credit rating agencies. Among thefactors, the external influence factors include the market demand for credit rating, thematurity of credit rating industry, and the regulation environment of credit rating market, andthe internal influencing factors include the operation situation of credit rating agencies, theirqualification for credit rating, credit rating business, information disclosure quality, creditrating quality, manpower resource, and corporation growth. According to the developmentsituation of Chinese credit rating market, Delphi method and analytic hierarchy process are used to build an assessment indicator system for the credibility of credit rating agencies, so asto evaluate the credibility of the bond rating agency in Chinese bond rating market. Since thecredit rating agencies are characterized by many unknown factors and information uncertainty, this paper will use analytic hierarchy process and grey relational analysis method tocomprehensively assess4Chinese credit rating agencies, which, according to credibilityranking from high to low, are China Credit Trust Co., Ltd., Dagong Global Credit Rating,China Lianhe Credit Rating Co., Ltd., and Shanghai Brilliance Credit Rating&InvestorsService Co., Ltd. The evaluation result is quite in conformity with the objective reality. Through analyzing grey relational coefficients, and comparing the pros and cons of thesecredit rating agencies in the same index, the paper has indicated a developing direction forcredit rating agencies. Finally, the paper, according to the result of empirical analysis,proposes a few countermeasures and suggestions on the self-construction of credit ratingagencies, in hope to provide references and foundations for credit rating agencies to developtheir credibility.