Credit Risk Assessment Of Chinese Manufacturing Listed Enterprises

Since the reform and opening up,China's manufacturing industry has established a complete and independent industrial system,which has effectively promoted the process of industrialization and modernization.In 2015,the State Council issued the "Made in China 2025" strategic plan and adhered to the basic principles of "innovation-driven,quality first,green development,structural optimization,and talent-oriented" to vigorously develop China's manufacturing industry."Innovation" has become the theme of the new era of manufacturing.Chinese manufacturing has always been committed to improving its innovation capabilities.However,the basis of innovation lies in a large amount of capital investment.For the manufacturing industry,there is no solid technical foundation,and investing a large amount of capital in technological innovation means huge risks.Relying on equipment maintenance,production processes,product warehousing and other links,the manufacturing industry needs a lot of funds to maintain operations.In order to do better in transformation and upgrading,iterative innovation,a lot of money may come from bank credit.However,according to statistics,in financing institutions such as banks,the non-performing loan ratio of manufacturing is as high as 50%.This indicates that there is a huge credit risk problem in the new stage of development of the manufacturing industry.This has also led to poor credit ratings in the financial market and the inability to obtain sufficient capital to operate and develop.Therefore,in order to better promote the healthy development of the manufacturing industry and ensure a good economic environment,manufacturing credit risk assessment has become a hot topic among scholars in the economic field recently.From the perspective of the construction of credit risk index system,this paper adopts the annual financial report data of listed companies as the index data source,and uses the stepwise regression,principal component analysis and Lasso method to process the index system,trying to obtain a representative and wide applicability index system,which can be extended to unlisted small and medium-sized manufacturing enterprises to strengthen the market monitoring and forecasting of credit risk of manufacturing enterprises,improve credit evaluation for manufacturing enterprises,make a contribution in transformation and upgrading.The main conclusions of this paper are as follows:(1)In data compression,the principal component analysis method is the most powerful,the 21 indicators were compressed into five principal components;the stepwise analysis method was followed by an index system containing seven indicators;Lasso method is the worst,retaining 14 important indicators;(2)Lasso-Logistic model has the highest comprehensive correct rate of 90%in predicting the correct rate of enterprise credit risk,followed by stepwise regression method(81.67%)and principal component analysis(79.17%).All the three methods can make reliable prediction to the evaluation of enterprise credit risk.(3)In the aspect of index system,the index system processed by Lasso method covers the most information,and is most suitable to be popularized in manufacturing enterprises as a standard index system,but the calculation is relatively complicated,and the index system obtained by principal component analysis is the simplest.The regression process is relatively simple,but many information is lost.(4)In terms of the importance of indicators,solvency indicators,cash flow indicators and growth capacity indicators are essential,indicating that solvency,cash flow and future growth capacity play a pivotal role in improving the credit evaluation of manufacturing enterprises.There are two main innovations in this paper:(1)Constructing a new manufacturing credit evaluation index system.Most of the existing literatures use the formed credit index system to compare the credit risk assessment methods.This paper starts from a large number of indicators and carries out gradual screening.It focuses on constructing the indicator system that are suitable for China's manufacturing industry with sufficient information,simple composition and convenient evaluation and lays the foundation for credit evaluation.(2)Performing a comparative analysis of the three selecting index methods.There are many methods for selecting index data,which are roughly divided into three methods:subset selection method,contraction method and dimension reduction.In this paper,three methods including stepwise regression,Lasso and principal component analysis are used to select the indicators.Compare the advantages and disadvantages of the three indicators selecting methods.