The significance of credit rating on Chinese auto industry Literature review

The significance of credit rating on Chinese auto industry - Literature review Example This study will mainly concentrate on the importance of credit rating of Chinese auto companies and how credit rating affects auto industry in China. The reason of focusing on Chinese auto industry is that auto industry in China has less influences of Chinese government policies, which could combine more experiences and academic results from western countries into this study. This study will also explore the significance of credit rating to the sustainable development of Chinese auto industry. In order to solve the problems about asymmetry information between lenders and investors and existence of credit risks, credit rating agency appears in the market. Focusing on the Chinese auto industry, this project will demonstrate the specified risk factors in the auto industry and how the ratings are determined by studying the features of Chinese credit rating market and comparing with the western countries’ experiences. The mathematical modelling can be applied in this part to show the ratings clearly and also case study will be used here. Moreover, this project will also introduce the impact to the large auto enterprises in China. This can be illustrated from two points: on one side, the significance of credit rating on developed corporate bonds of the auto companies will be studied; on the other side, the role of credit ratings on new products of asset securitisation of Chinese auto firms will be analysed. Furthermore, based on the studies, this project will discuss the sustainable development strategies for Chinese auto industry. 4. The impact of credit ratings to Chinese auto corporate bonds which are already in the market need to be discussed; the important role of credit ratings on new financial products of Chinese auto asset securitisation will be analysed. Credit risk in the financial market can be defined as the uncertain ability of an obligor to repay the money owing. Adams et al. (1999) mentions thatCredit rating started back in 1837 by Mercantille