Research On The Relationship Between Credit Rating And Financial Risk Prevention

Credit rating is an intermediary organization which function is reveal credit risk, provide investment reference, in the modern market it is playing an increasingly important role. A growing number of investors and regulators rely on the report of credit rating companies to make investment and regulatory strategy to reduce financial risks caused by the lack of information, thus to explore with the relationship between financial risk and credit ratings prevention is necessary. This article attempts to start from economics theory of credit rating, focusing on the function of credit rating, the path of credit rating participation in financial risks prevention, as well as empirical analysis of credit risk, make the concludes that credit rating weakening credit risk so as to effectively reduce the financial risks .In addition, another study in this article focused on the evaluation and discussion on the existing rating system, due to the occurrence of sub-loan crisis, the credit rating industry has been widely criticized, because of the inglorious role played by the credit rating company which should have to guard against financial risks in this financial crisis, the rating industry is faced with its own self-examination and reform, in particular, China is not yet ripe for the industry in terms of rating, so drawing on lessons from sub-loan crisis, regulate operation of credit rating industry in must be carried out. This paper provides the mode selection for credit rating system in China, and gives various proposals in order to effectively play the credit rating's function on guarding against financial risks.The article is divided into four chapters, the first chapter is about the background, significance of this paper, and Research at home and abroad; chapter two briefly introduce the basic concept of credit rating, focusing on the function of credit rating which is the theoretical basis for the following analysis; The chapter three introduce the relationship between credit rating and financial risk prevention, first of all, investigate the reality needs, effectiveness and areas that credit rating involved in financial risks prevention, and then introduced the sub-loan crisis process, as well as the evolution of this process and the mistakes credit rating industry make, the impact on the rating industry and enlightenment; The final chapter give some advise about the china's credit rating industry based on the lessons learned from all of this, recommend to make criterion of China's rating industry and provide reform mode for industry to select in the future.