Research On The Influencing Factors Of Bond Credit Rating Quality In China

In the past two years,default of high-rating bonds have occurred frequently,and investors have paid more and more attention to the credit risk of bonds.As the gatekeeper of the bond market,credit rating agency should give full play to its information intermediary function to reveal the issuer’s credit risk for investors.However,the problems such as rating inflation,inconsistencies in differentiation of rating,and lagging tracking ratings show that the responsibilities of rating agencies have not been fully fulfilled,and there is room for further improvement in rating quality.Why is the quality of credit rating not high and how to improve the quality of China’s credit rating has become an urgent problem to be solved.This paper firstly introduces the current situation of China’s bond credit rating market.Through theoretical analysis,it is concluded that market competition,regulatory policies and payment mode are important factors that affect the quality of credit rating.Secondly,this paper analyzes the factors affecting the default of AAA-rating bonds,and uses the OLS and Ordered Logit models to empirically test the impact of market competition,regulatory policies,and payment mode on the level and quality of credit ratings.The research results show that: fierce market competition will exacerbate credit rating inflation,weaken the effect of credit rating on reducing credit spreads,and thus reduce the quality of credit rating;After the implementation of the Interim Measures for the Administration of the Credit Rating Industry,the overall credit rating of the bond market has declined,and the quality of credit rating has improved;the credit rating inflation is more likely to occur under the issuer payment mode,and the credit rating quality is higher under the investor payment mode.Then,through heterogeneity analysis,this paper finds that in non-state-owned enterprises,market competition,regulatory policies,and payment mode have a more pronounced impact on credit rating quality.In addition,through case analysis,it is pointed out that China’s credit rating attaches too much importance to the background of state-owned enterprises,the independence of rating agencies under the issuer payment mode is not high,and the internal management and rating behavior are not standardized.Finally,according to the research results,this paper puts forward policy suggestions on how to improve the quality of China’s credit rating.This paper uses empirical methods to test the impact of regulatory policies on credit rating quality,and provides empirical evidence for the theoretical analysis;and further discusses the impact of market competition on credit rating quality from both theoretical and empirical perspectives.and provides more empirical evidence on market competition reducing rating quality.In addition,this paper systematically sorts out the influencing factors of credit rating quality,rather than just discussing a single influencing factor,and the analysis is more comprehensive.