The Significance of Credit Rating on Chinese Auto Industry

This study will mainly concentrate on the importance of credit rating of Chinese auto companies and how credit rating affects the auto industry in China. The reason for focusing on the Chinese auto industry is that the auto industry in China has fewer influences on 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 the Chinese auto industry.
In order to solve the problems of asymmetry information between lenders and investors and the existence of credit risks, the 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 modeling 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 securitization of Chinese auto firms will be analyzed. Furthermore, based on the studies, this project will discuss the sustainable development strategies for the Chinese auto industry.
Research Objectives:
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 securitization will be analyzed.
Sustainable development strategies of credit ratings in the Chinese auto industry will be analyzed.
Credit risk in the financial market can be defined as the uncertain ability of an obligor to repay the money owing.