Research On Credit Risk Of Traditional Chinese Medicine Companies Based On KMW

With the rapid development of the world economy,the scale of credit transactions is becoming larger and larger.At the same time,the credit risk also becomes more pominent.Credit risks may lead to the serious financial crisis while accumulating to a certain point.Credit problems seriously hamper the companies' long-term development and is not good to capital market.Therefore,we must take measures to manage the credit risks.Our studies on credit risks mostly focus on the financial or manuafacturing industry,there were less studies on pharmaceutical industry,as a sub-industry of pharmaceutical,the traditional Chinese medical industry(TCM)develops rapidly,so we choose listed companies to explore the credit risks hidden behind the fast development,try to propose countermeasures for managing risks which will help the industry develop better.In view of this,this article firstly elaborates the definition and evaluating methods of credit risk,then reviews the studies.After comparing different methods,we choose KMV model to evaluate risks;Secondly,introducing the KMV model and the set of parameter;Thirdly,using the model to evaluate the credit risk:50 listed TCM companies from 2014 to 2016 are selected,then calculate the default distance of each company.Based on the results,we analyse the changes of credit risk from different periods and boards,concluding that the credit risks rose at first and then declined,the main board market has the lowest risk,the highest is GEM.Finally,we choose some financial indicators in order to figure out what influnce the credit risk,and conclude that the company's scale,opreational capability and stability have significant correlation with the default distance.Based on the analysis,this papar propose the countermeasures for companies and capital market to manage the risks.The results of the study indicate that the credit risk of the TCM industry is getting better and worth to investing;the TCM companies can take advantages and avoid weaknesses to improve credit risk management abilities;for the investor and banks can make investment and loan decisions based on the evalustion results;the govorments can perfect relevant regulations and policies to improve the credit risk management capabilities.