Free Essay

Credit Rating Company

In: Business and Management

Submitted By PritomArafat
Words 2113
Pages 9
CRAB Rating Scale
CRAB Long Term Rating Scale
CRAB Short Term Rating Scale
CRAB Long Term Rating Scale
Rating Methodologies:
It’s different for several sectors. Such as several methodologies for bank rating, financial institution rating, corporate rating, general insurance rating, life insurance rating, government owned enterprise rating and securitization rating.
Other services:
1. Grading Services
2. Advisory & Consulting Services
3. Information Service

National Credit Ratings Ltd

National Credit Ratings Limited (NCR) is a credit rating agency in Bangladesh. It was incorporated as a public limited company under the Registrar of Joint Stock Companies in August 2010 and received its certificate for commencement of business in July 2010. It was granted a licence by the Securities & Exchange Commission (SEC) of Bangladesh for operating as a credit rating company in September 2010. The formal launching of the company was held on 18 October 2010.
Managing director & CEO: MD. Momin Ullah Patwary, BP, is a former secretary to the Govt. of Bangladesh.
The services provide by the agency are followings: Entity Rating, Instrument Rating, Insurance Company rating, Asset Manager Rating, Sectoral Grading and Ranking.
A true and fair opinion is our responsibility. NCR gives opinion as to the ability of an entity to meet its financial obligations. The rating process primarily concentrates on business and financial risks. The focus is to assess cash generation capability and its adequacy to meet debt obligations on a timely basis. The analysis attempts to determine the long-term fundamentals and likelihood of change in these, which could affect the credit worthiness of the entity.
The analytical framework of our rating methodology is divided into two interdependent segments. The first deals with the operational characteristics and the second with the financial characteristics. Besides we make use of both the qualitative and quantitative analysis in arriving at the rating opinion. Analysis typically involves at least three years of operating history and financial data as well as forecasts of future performance. To achieve a clearer perspective on relative performance, a company’s performance is compared with that of others in the same industry. In addition a sensitivity analysis is performed to assess a company’s capacity to cope with changes in its operating environment.
The rating accorded is based on numerous factors including, but not restricted to those detailed below:
Operating Environment
The industry’s volatility, its position within the broader economy and effects of economic cycles on the industry. Government regulations, tariff structure; threat from imports; price competitiveness of the domestic industry and pace of technological change; Basis of competition and key success factors; structure of the industry, entry and exit barriers; environmental and political factors.
Entity’s Relative Position:
Size of the entity and market share; Competitive advantages and weaknesses; Relationship with the suppliers and buyers; Diversification of income sources; Technology.
Stand alone Financial Strength
Capital structure, profitability, liquidity position and financial flexibility; Financial projections; Free cash flows and their sensitivity to various economic industrial and business risks over the medium term; Accounting policies and practices.
Background and history of the sponsors; Corporate strategy and philosophy; Quality of management and management capability under stress; Organizational structure, personnel policies including succession planning.
Rating Methodology:
Different methodologies for different sectors:
Corporate rating methodology Financial institutions rating & Methodology
Bank loan rating methodology Insurance company rating methodology

Emerging Credit Rating Limited

Emerging Credit Rating Limited (hereinafter referred to as ECRL) was incorporated in March 2009, with the view to providing Credit Rating Services in Bangladesh. ECRL is committed to providing Bangladesh’s credit market with independent and prospective credit opinions, research and data. In addition to our core rating business, in the future we hope to branch out into providing research data and analytical tools for assessing credit risk, and publish market-leading credit opinions. The company has been built on a foundation of local market experience, which spans throughout the Corporate sector of the country. The company is headquartered in Dhaka, Bangladesh, with a view to expansion to other financial districts all over the nation. ECRL has established a technical collaboration with a Malaysian Rating Company known as Malaysian Rating Corporation Berhard (MARC), which is also affiliated with one of the top ranking Rating companies in the world “Fitch Ratings”. Under the technical agreement, ECRL shall adopt all the rating methodologies, definitions and symbols of MARC, who implements the standard global practices of its affiliate.
CEO: Mr. Ahsan Parvez is a fellow member of ICAB and was an Articled student of Rahman Rahman Huq, Chartered Accountants (Member firm of KPMG). Prior to joining ECRL he served as the National Financial Controller at DHL. He has a prolific career of 25 years of services in Senior Management positions.
Rating Methodology:
Different methodology for different sectors:
Corporate Debt Rating
1. Rating Process for Construction Companies
2. Rating Process for the Telecommunication Industry
3. Rating Process for the Oil & Gas Industry
4. Rating Process for Property Companies
Financial Institution Rating
1. Rating Process for Financial Institutions
2. Rating Process for Financial Holding Companies
3. Rating Process for Islamic Financial Institutions
General Insurance
Life Insurance
Project Finance
1. Rating Process for Independent Power Producers
2. Rating Process for Water Industry
Issuer Debt Rating
Rating Process Govt Agencies
Bond Rating
Rating Process:

Alpha Rating Company

It was incorporated on the 24th of February 2011. a result of the initiative of a few distinguished and renowned professionals of Bangladesh and the with support and organizational assistance from SATCOM IT Ltd., Axis Resources Ltd., Equity Care Bangladesh Ltd., and TAN Equity and Investment Ltd.
Managing Director: Muhammad Asadullah
• Corporate Entities Rating
• Financial Institution's Rating
• Insurance Company's Rating
• Sub-National Entities Rating
• Project Finance Rating
Rating Methodology
The rating methodology incorporates quantitative factors.The rating reflects the company’s current financial strength as well as how the financial position may change in the future. In this respect, extensive research on the out look of the sector in which the firm operates is also an integral part of the rating methodology. The ratings are assigned on a national scale and corporations are evaluated in respect to the financial strength of their peers in Bangladesh. Within this context, our analysis takes into consideration the fundamentals of the Bangladesh economy and the key features of the sector in which the company operates. The issuer’s evaluation will also take into account:
• Recent economic developments,
• The quality of economic and financial management,
• The debt and characteristics of the sector,
• Economic stability,
• Political stability and effectiveness of the political system,
• Long-term trends and economic outlook.

A corporate rating evaluation, whether for an industrial company or a company in the service sector, will consider three main areas:
1. Business Risk Analysis
2.Financial Risk Analysis
3. Management/Ownership/Governance Risk Analysis

Rating Scales
1. Long Term Rating Scale
2. .Short Term Rating Scale

Bangladesh Rating Agency LTD
The Bangladesh Rating Agency Limited (BDRAL), an initiative of Dun & Bradstreet South Asia Middle East Limited and nine Banks and Financial Institutions of Bangladesh, aims to provide credit rating service for the Small and Medium Enterprises of the country – the thrust sector of the economy. BDRAL is the country’s first rating agency that focuses primarily on SMEs and was accorded Credit Rating License by the Securities and Exchange Commission of Bangladesh(SEC) in March 2012 to commence SME Ratings.
With the strong impetus of Bangladesh Bank which is encouraging the local banks and FIs to enhance and ensure increased target oriented disbursement of funds to the SME sector, BDRAL’s SME Ratings aim to address the multi-faceted challenges faced by Banks in SME lending by providing ratings that are comprehensive, transparent, and reliable thus facilitating greater and easier flow of credit from the banking sector to the SMEs.
CEO: Tarique Afzal
The Bangladesh Rating Agency Limited (herein after referred to as “BDRAL”) rating frameworks considers a number of financial and non financial parameters of the enterprise and regulations and industry specific dynamics. BDRAL believes that the industry in which a SME operates has a direct bearing on the overall performance of the SME and therefore rates SMEs based on industry benchmarks. BDRAL Rating is a comprehensive assessment of the enterprise taking into considerations the overall financial and non financial performance of the subject company vis à vis the other peers in the industry in the same line of business and size criteria.
Based on its assessment and understanding BDRAL has developed rating methodology framework which mainly addresses the following areas
1. Industry Risk
2. Business Risk
3. Management Risk
4. Financial Risk

Rating Parameters:

ARGUS Credit Rating Services Ltd

ARGUS Credit Rating Services Ltd. (ACRSL) is the next-generation Credit Rating Agency of Bangladesh. Founded as a joint-venture between global experts in credit & equity research and local sponsors with strong capital markets track record, ACRSL received its license from the SEC in 2011.
Their Services:
We provide a host of services, including Credit Rating, Credit Advisory, Project Feasibility, Credit Research that together evaluate and quantify credit and business risks associated with following clients and instruments:
Corporate & Entity:
Banks, NBFIs, Insurance companies, Manufacturers and other corporate.
Financial Instruments:
Various capital raising instruments including bonds, preference shares, derivatives, securitized bonds.
Bank Loan & Facility Rating:
For the corporate houses seeking bank loan and facilities above certain amount credit Rating is becoming a requirement.
Project Financing Rating:
A project’s ability to service long term debt for sectors such as real-estate, manufacturing, power, and infrastructure.
SME Rating:
Requires special expertise and methodology, which is provided by our international partner and affiliation, DP Information Group with 30 years of SME Rating experience in Singapore and emerging Asia.
Credit Advisory service
The service includes a in depth analysis of company’s financials, overview of management and growth potential, identifying the major challenges and opportunities, preparing information memorandum of the company for availing investing facility and also provide a tentative view on the credit rating of the company.
Company profiling
Prepared a brief profile of the company and published the list so that the company can use this as a promotional tool.
Project Feasibility Study:
Project Feasibility Studies which include technical and financial feasibility, regulatory and compliance aspects identification , risk identification & mitigations etc.
Rating Methodology
The methodologies have been designed after due consideration to the specific insights of each sector with appropriate weightage to both qualitative and quantitative factors of each sector. The qualitative and quantitative factors are converted to specific traits with appropriate weightage for highest performance, lowest performance, industrial average etc. to arrive at a meaningful rating of an organization. We have designed the specific rating methodology for specific sectors.

WASO Credit Rating Company (BD) Limited

WASO Credit Rating Company (BD) Ltd. (hereinafter referred as "WASO") started its journey on 15th February, 2012 with the license of Securities and Exchange Commission (SEC) having the technical collaboration with Financial Intelligence Services Ltd. (FISL), Hong Kong. FISL is the Hong Kong based rating wing of World' vest Base,(WVB) USA which is renowned for its unsolicited rating approach and unique rating model. Its comprehensive financial database spans over 51,000 public companies in more than 130 countries from Asia, Africa, Australia, Europe, Latin America and North America placed it in a unique position among the global financial intelligence service provider companies. Through technical agreement with FISL, WASO created bondage with global resources hub in providing the best judged opinion through rating services to the national financial sector. WASO envisaged to offer both rating and related services with a vision to establish a national risk management platform for the financial and non-financial sector. WASO is in the process of recognition of External Credit Assessment Institution (ECAI) from Bangladesh Bank.
Managing Director: Engr. Abdul Wadud, FIEB

Rating Services:
Issuer/Entity Ratings:
For Corporate, Banks and Financial Institutions
Issue Specific Rating: It can be in both form short term and long term as following:
Long Term Ratings:
For Bonds, Debentures, Structured Products, For Tier II and Tier III Capital of Banks, Mutual Fund Ratings
Short Term Ratings:
For Commercial Paper, CDs of Banks and Corporate House
Bank Loan/Facility Ratings:
Bank Exposure rating under Basel II requirement for corporate, SME, MFIs and others
Claim Paying Ability Rating:
For General Insurance and Life Insurance Companies
Due Diligence Service:
For Project Finance, Corporate Restructuring, Amalgamation, acquisition/absorption, and Reconstruction
Accreditation Service:
For Valuation Agencies, Third Party Agencies like CPV Agencies
Rating Policy:
1.1 Meaning of WASO Rating
1.2 Rating Request
1.3 Rating Declaration
1.4 Review Appeal Process
1.5 Ratings Surveillance
1.6 Ratings withdrawal & Suspension
1.7 Ratings Release
1.8 Confidentiality of Issuer information
1.9 Unsolicited Rating Policy
1.10 Whistle-blower Policy
1.11 Recognition of Default

Rating Process:

Similar Documents

Premium Essay


...Rating Action: Moody's assigns ratings to Chrysler refinancing; Ba1 to first lien term loan and B1 to second lien notes. Outlook is stable. Global Credit Research - 29 Jan 2014 Approximately $5 billion of obligations rated New York, January 29, 2014 -- Moody's Investors Service assigned ratings to debt securities being offered by Chrysler Group LLC (Chrysler) in connection with the refinancing of $4.7 billion of VEBA trust note. Ratings assigned are: Ba1 to $2 billion of new first-lien term loans that rank pari passu with the company's existing $2.9 billion in outstanding term loans (also rated Ba1) and B1 to $2.7 billion of second-lien secured notes that rank pari passu with the company's $3.2 billion in outstanding second-lien notes (also rated B1). Proceeds will be used to refinance $4.7 billion in outstanding VEBA trust note. The company's B1 Corporate Family Rating (CFR), B1-PD Probability of Default Rating, and SGL-2 Speculative Grade Liquidity ratings are unaffected. The rating outlook is stable. RATINGS RATIONALE The assignment of the new Chrysler ratings recognizes that the transaction is a refinancing that will not materially change the company's level of outstanding debt. Benefits from the transaction will include a meaningful reduction in interest expense as the VEBA notes carry an effective interest rate of 11.7%. The interest rate on the new offerings will be considerably lower. However, the newly-offered obligations will have a shorter maturity profile......

Words: 2381 - Pages: 10

Premium Essay

The Role of Credit Rating Agencies in the 2008 Financial Crisis

...of credit rating agencies such as Standard and Poor’s and Moody’s in promoting well-functioning capital markets. How well are the agencies performing their roles?” – December 2013 past paper Credit rating agencies are private profit oriented entities that earn revenues for issuing opinions on the credit worthiness of sovereign governments, corporations and a variety of specific debt issues and issuers. They enjoy a high level of credibility in the investment community and their opinions are extremely influential. Credit rating agencies first emerged in the United States in 1909. They initially issued ratings solely for the debt obligations of the railroad, which had catalysed the development of a global bond market to finance their expansion. The advent of credit rating agencies in the early 20th Century reflected the emergence of highly capital intensive industries in the USA and the corresponding expansion of capital markers to finance them. Over recent decades, global capital flows have accelerated as sovereign borrowers, notably in the developing world, turn to private capital markets for financing needs previously met by commercial and development banks, as well as multilateral agencies. The two major credit rating agencies are Standard and Poor’s and Moody’s Corporation. Standard and Poor’s is now a wholly owned subsidiary of the McGraw Hill Group of companies,, while Moody’s Corporation is the parent company of Moody’s Investor Services. Credit rating......

Words: 1385 - Pages: 6

Premium Essay

Controversial Issue

...CHAPTER 10: LONG TERM LIABILITIES There are two ways for a company to raise money: Debt VS. Equity Chapter 10 covers Bonds –a type of debt financing. Individuals, companies, and governments often issue bonds in order to raise funds to finance large projects (ex. prop 1A on the November ballot was to help the state of California raise capital to develop a high speed train). Bond – a written promise to pay an amount (par value) plus interest. Bonds offer the following advantages: 1. Bonds do not affect the ownership of the company. 2. Interest on bonds is tax deductible. 3. Bonds can increase the company’s return on equity. Bonds offer the following disadvantages: 1. Bonds require periodic payment of interest and then par value at the bond’s maturity date. 2. Bonds can decrease the company’s return on equity. Terms ➢ Bond Certificate – legal document between the issuer (company) and the bondholder (investors). Bond certificates include the following information: o Par Value o Maturity Date o Contract Interest Rate ➢ Par Value – the specific amount (or principal) that the issuer, or company, must pay at the bond’s maturity date. The par value is also referred to as face value or face amount. ➢ Contract Interest Rate – the rate used to determine the amount of cash interest the borrower pays and the investor receives. Also referred to as the stated or coupon......

Words: 971 - Pages: 4

Free Essay

Rating Agencies and Their Excessive Power: Why Are They so Powerful?

...Rating agencies and their excessive power: Why are they so powerful? By Nadezhda Peneva American University in Bulgaria, EMBA, Cohort 13 March 21, 2014 Abstract The paper is set out to find out the influence of credit rating agencies on the business and the national policies as well as to elaborate on how powerful are they for the society and why. Over 100 years rating agencies demonstrate excessive power, but is this just an assumption or it could be a strong conclusion? In the paper the role and power of the rating agencies like Standard and Poor’s, Moody’s and Fitch would be defined and assessed. 1. Introduction Credit Rating Agencies (CRAs) could be generally defined as „providers of opinions about the creditworthiness of companies and countries which have become very important players in financial markets due to growth in Capital Markets, Credit Derivative Markets, Globalisation of Capital Markets; and an increase in Regulatory Use of Ratings” (Ryan, 2012). Here comes the question: Why actually they have become very important players globally? CRAs are companies who assign credit ratings for the debt of public and private companies who are issuers of certain types of debt obligations and also CRAs assign credit ratings for debt instruments themselves. Usually the issuers of securities are companies, governments, NGOs and entities with special purposes or national......

Words: 4707 - Pages: 19

Free Essay

Asset-Backed Securities

...worth more off the balance sheet than on it. q Copyright ©2001 Ian H. Giddy The Securitization Process4 What is the Technique for Creating Asset-Backed Securities? A lender originates loans, such as to a homeowner or corporation. q The securitization structure is added. The bank or firm sells or assigns certain assets, such as consumer receivables, to a special purpose vehicle. q The structure is legally insulated from management q Credit enhancement and rating agency reviews q The SPV issues debt, dividing up the benefits (and risks) among investors on a pro-rata basis q Copyright ©2001 Ian H. Giddy The Securitization Process5 Securitization: The Basic Structure SPONSORING COMPANY ACCOUNTS RECEIVABLE SALE OR ASSIGNMENT SPECIAL PURPOSE VEHICLE ISSUES ASSET-BACKED CERTIFICATES ACCOUNTS RECEIVABLE Copyright ©2001 Ian H. Giddy The Securitization Process6 The Process Is the company Is the company ready? ready? Are the assets Are the assets suitable? suitable? What pool? What pool? What legal What legal structure? structure? What...

Words: 3451 - Pages: 14

Free Essay

Rating Agencies and Financial Speculation

...Università degli studi di torino | Rating agencies and financial speculation | An analysis of the protagonists of the world market | | Elisa Valenti | Matricola 711323 | | INDEX The protagonists of the world market | 2 | A particular source of power: rating agencies and country rating | 2 | Conflict of interest? | 4 | Other issues of concern * Barriers to entry and lack of competition * Transparency | 555 | The importance of reputation | 6 | What went wrong? | 7 | The need for regulation | 7 | Can we trust the rating agencies? * The Enron Case Study * The Parmalat Case Study | 889 | Are rating agencies guilty? | 12 | The sinister power of rating agencies | 13 | A world without rating agencies | 14 | Conclusions | 15 | References | 16 | The protagonists of the world market A rating agency is a private firm which publicly evaluates a company capacity to repay the debt issued. This capacity is classified using a scale that goes from a maximum of AAA and a minimum of DDD. Obviously the evaluation received influences the interests that a company has to pay to receive credit. Today the rating market is controlled by three giants, the so called “three sisters”: Moody’s Investor Service, Standard & Poor’s and Fitch . Till the 70s rating agencies were not making high profits, but today they are extremely relevant such that in 1996 the New York Times was writing that there were just two powers in the world, the......

Words: 4788 - Pages: 20

Premium Essay


...several business risks in March of 1996 that will affect its financing policy. Traditionally a one-product-line company, Polaroid still derives 90% of its revenues from photographic products. Although the company enjoys a monopoly on instant chemical photography, digital imaging technologies pose a substantial threat. It is not clear how fast these technologies will develop or displace conventional photography, but it is clear that Polaroid will not have a monopoly in these markets. And the growth of quick "one-hour" photo development processing could make instant photography less appealing to consumers. Further, an increasing portion of Polaroid's revenues come from outside the United States. Many of the sales are in developing countries: Russia alone accounted for almost 9% of 1995 sales. Polaroid does not have a large installed base in these countries, and the Polaroid brand name may not be as strong as in the United States. Although Polaroid uses international lines of credit and possibly other hedging techniques to reduce currency risk, doing business in developing nations poses an increased market risk.  The growth in international business is a logical move for Polaroid given that U.S. sales are flat and net margins of foreign sales have been higher than domestic margins for the past three years.  The increased risk and the possibility that the company will need additional funds to develop or acquire new technologies in the near future mean that Polaroid must......

Words: 2604 - Pages: 11

Premium Essay

Business Strategy Game

...the EPS drastically dropped to $ 0.72. This was because the net profit that year was only $ 7,202. Since 10.000 shares were emitted, the price per share was $ 0.72. It appeared that supply was higher than demand. This was reflected in our price against that of our competitors. Ambitious was left with unsold stock and that was not good for the net profit. In year 12, the share subsequently rose to $ 3.94. Compared with the previous year, the net profit rose from $ 7,202 to $ 39,400. This was partly because Ambitious had limited stocks over year 11 and consequently sold more shoes. In year 13, for the first time, the company started selling in the private label market and shares increased to $ 4.65. Also on the Wholesale and Internet market everything sold and Ambition even sold a part of their old stock. The EPS could have been higher, but the company invested a small part in additional capacity. In year 14 the growth of earnings per share rose to $ 5.40. In this year Ambitious has celebrity appeal for the first time and has invested in a new plant in Latin-America. The expectation was that the earnings per share would decrease in year 15. This has happened. The share has dropped to $ 4.87 because Ambitious made use of the extra capacity and wanted to sell as much as possible and did not cut back on marketing expenses. Prices are lower this year because Ambitious wanted to sell all its stock. RETURN ON EQUITY Return on equity (ROE) is...

Words: 1258 - Pages: 6

Premium Essay

Pnb Appraisal

...A Summer Training Report On CREDIT APPRAISAL & CREDIT RISK RATING At Punjab National Bank Submitted in partial fulfillment of the requirements of Master of Business Administration (MBA) Amity University, Gurgaon (Manesar) Under the Guidance of: Submitted By: Name: Mr. A.K. Rastogi Mohit Batra Senior Manager MBA: 3rd Semester A50050213025 Amity Business School Amity University Gurgaon SESSION 2014 – 2015 Preface While searching for a suitable topic for the MBA Dissertation, I Had gone through the various projects & books, ultimately settling On the topic credit appraisal and credit risk rating –A Study With Reference To Punjab national bank The topic inspired me, to go through the various books, articles, Reports etc. to know the process and also understand the real Issues plaguing the industry. All these aspects then resulted in the development of the project Report titled ‘credit appraisal and credit risk rating –A Study with Reference To Punjab national bank.’ It is strongly hoped that this project covers not only the various Requirements of the Project Study but also of the Industry . Acknowledgement I would like to express my profound gratitude to all those who have been instrumental in the preparation of my project report. To start with, I would like to thank the organization......

Words: 16947 - Pages: 68

Premium Essay


...1 Because both JP Morgan and Merrill Lynch promised to underwrite $17.5 billion of the debt financing and $6 billion in the bridge loans and the another $1.5 billion of credit lines. FCX’s two equity related transactions were led by JP Morgan and Merrill Lynch as joint book-runners. Big risk happened to the FCX interests and these two firms. FCX’s book running and M&A were controlled by the two firms which facilitated M&A transaction. Than, the two firms equally shared fees and league table credit for these transactions. It is a risker way to commitment to provide bridge loans. 2 (1) It is the leading syndicated and leveraged finance platform worldwide, lending money to private equity firms or corporations for leveraged acquisitions. They also provide liability management and financial restructuring advice to corporate clients and private equity portfolio companies. (2) Because the FCX wants to acquire a larger company and the large number of debt, and the group has to do the analysis of the capital and credit ratings and to sell debt to other investors. When the firm issues a press release describing a merger, it is the first time that an individual in sales and trading will hear of it. 3 Capital risk is the financing risk associated with investment bank’s underwriting commitment in relation to financing an acquisition and underwriting transactions. If the bank commits to providing a loan, it undertakes in relation to an acquisition.(2) If the firm facing market risk, the...

Words: 653 - Pages: 3

Free Essay


...Credit Risk Management Ken Brown Peter Moles CR-A2-engb 1/2012 (1044) This course text is part of the learning content for this Edinburgh Business School course. In addition to this printed course text, you should also have access to the course website in this subject, which will provide you with more learning content, the Profiler software and past examination questions and answers. The content of this course text is updated from time to time, and all changes are reflected in the version of the text that appears on the accompanying website at Most updates are minor, and examination questions will avoid any new or significantly altered material for two years following publication of the relevant material on the website. You can check the version of the course text via the version release number to be found on the front page of the text, and compare this to the version number of the latest PDF version of the text on the website. If you are studying this course as part of a tutored programme, you should contact your Centre for further information on any changes. Full terms and conditions that apply to students on any of the Edinburgh Business School courses are available on the website, and should have been notified to you either by Edinburgh Business School or by the centre or regional partner through whom you purchased your course. If this is not the case, please contact Edinburgh Business School at the address......

Words: 21029 - Pages: 85

Free Essay

Effects Credit Rating on Loan Approvals

...AN INVESTIGATION INTO HOW CREDIT RATING AFFECTS LOAN APPROVALS IN COMMERCIAL BANKS. MARCH 2013 “A research project proposal submitted to the school of business and public management in partial fulfillment of the requirement for the award of the degree of bachelor if commerce finance option in KCA University.” TABLE OF CONTENTS pages DECLARATION 3 CHAPTER ONE 3 1.0 Introduction 3 1.1 Background 3 1.2 Statement of the problem 3 1.3 Research objectives 3 1.4 Research questions 3 1.5 Importance of the study 3 CHAPTER TWO: Literature review 3 2.0 Introduction 3 2.1 Literature review Error! Bookmark not defined. 2.2 Chapter summary 3 CHAPTER THREE: Research methodology 3 3.0 Introduction 3 3.1 Research Design 3 3.2 Population and sample 3 3.3 Data Collection Methods 3 3.4 Data Analysis 3 REFERENCES 3 APPENDIX ONE: Questionnaires Error! Bookmark not defined. APPENDIX TWO: List of Kenyan Banks in the study 3 CHAPTER ONE 1.0 Introduction Credit rating has been defined in different ways: Admin (2008) defines it as the degree of credit worthiness assigned to an individual based on the credit history and financial status. Credit rating also assesses the credit worthiness of a country and corporation. It helps lenders or investors to know if the subject will be able to pay back a loan and can also be used to adjust the insurance premium, to determine......

Words: 4336 - Pages: 18

Free Essay

G/L Accountant

...G L O B A L A S S O C I AT I O N O F R I S K P R O F E S S I O N A L S R I S K H I S TO R Y The Origins and Evolution of Credit Risk Management Credit risk can be traced back thousands of years. But where exactly did it come from and what are its basic tenets? What events changed the course of credit risk history? And who were the true innovators of credit risk management? Aaron Brown takes us on an interesting journey, from the ancient origins of credit to the birth of ratings agencies, all the way through modern-day deficiencies in understanding probability of default. C redit is much older than writing. Hammurabi’s Code, which codified legal thinking from 4,000 years ago in Mesopotamia, didn’t outline the basic rules of borrowing and didn’t address concepts such as interest, collateral and default. These concepts appear to have been too well known to have required explanation. However, the Code did emphasize that failure to pay a debt is a crime that should be treated identically to theft and fraud. The Code also set some limits to penalties. For example, a defaulter could be seized by his creditors and sold into slavery, but his wife and children could only be sold for a three-year term. Similarly, the Bible records enslavement for debt without disapproval; for example, the story of Eli’sha and the widow’s oil concerns the threatened enslavement of two children because their father died without paying his debts. But the Bible also goes further than......

Words: 2439 - Pages: 10

Free Essay

Risk Compared with Australia Banks and Hsbc

...opportunities, however other commercial banks are exposed to big challenge and face many risks like credit and liquidity risk. Given this situation, APRA outlines the regulations to ensure and consolidate the safety for Australian banking system, such as Liquidity and Credit quality. This report will analyse the difference between credit risk and liquidity risk at the beginning, then the regulations from APRA in terms of credit risk for the major and smaller banks will be discussed. Next, there will be 3 ratios of credit risk of the “big four” contrast to a major commercial bank in the UK. This report will be end with evaluating the credit risk of 5 major banks and give some findings are regarding with the credit risk of 5 banks. 1. Explain the difference between credit risk and liquidity risk for a bank. 1.1 Credit risk Credit risk is the risk that the promised cash flows from loans and securities held by FIs may not be paid in full (Lange & Saunders, 2013). Normally, all financial institutions have probability to face this risk. However, if borrowed principal is paid on maturity and interest payments are paid on the due date, FIs can eliminate credit risk. Additionally, credit risk can be subdivided into firm-specific credit risk and systematic credit risk. Firm-specific credit risk affects a particular company and can be eliminated by good diversification, while systematic credit risk involves macroeconomic. 1.2 Liquidity risk Liquidity risk is the risk that......

Words: 2315 - Pages: 10

Premium Essay

Do Firm Target Credit Ratings

...DO FIRMS TARGET CREDIT RATINGS OR LEVERAGE LEVEL IN PAKISTAN SUBMITTED TO: Dr. SOHAIL YOUNIS SUBMITTED BY: JAMSHAID ALI BBS GROUP C IM|SCIENCES, HAYATABAD, PESHAWAR ABSTRACT The topic selected for this study “Do firm Target Credit Ratings or Leverage Level”. In this study 20 Pakistani non-financial firms are proposed to be included to observe the different determinants of capital structure which influence the leverage ratio and the study is also proposed to find out relationship of different explanatory variables with each other whether positive or negative influence exists. The variables taken in this study are Leverage, earnings before interest and tax, business size, fixed asset, depreciation and market to book value. This study also includes expression of different economic and financial analyst about the determinants of capital structure and this study also relates to the theory of capital structure by M.M and all other analyst. TABLE OF CONTENTS Contents Section 1 INTRODUCTION TO RESEARCH PROPOSAL ............................................................................. 4 Introduction .............................................................................................................................................. 4 Introduction to research question and underpinning theories ................................................................ 4 Introduction to the context ............................................................

Words: 2534 - Pages: 11