A Research of the Relationship among Credit Rating,Loan Quality,Non-Performing Loan and Market Value Added-An Empirical Study of Banks in Taiwan

• Main Authors: WU YAO KUN, 吳耀坤
• Other Authors: Lai Wen Quai
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/48237593569716484097

碩士 === 大葉大學 === 國際企業管理學系碩士在職專班 === 95 === The purpose of this study was to investigate the effects of credit rating, credit granting quality, and non-performing loans (NPL) on market value added using Logistic Regression. The research subjects were domestic OTC and TSE listed banks, and the research period spanned from 2004 to 2006. Three major conclusions were induced: (1) Credit rating has negative effects on NPL. That is to say when banks have a higher credit rating, they have a lower loan overdue ratio, a higher NPL coverage ratio, better debt-paying ability, and a lower occurrence rate of NPL. (2) Credit granting quality has negative effects on NPL. In other words, when banks have higher credit granting quality, they have a better credit management system, a stricter auditing procedure, and more comprehensive risk control, so they can effectively reduce loan overdue and avoid the occurrence of NPL. (3) NPL has negative effects on market value added. In other words, more NPL indicates more loan overdue and weaker NPL coverage ratio and will cause the rising of bad debts amount, erosion of bank’s benefits, loss of the bank, loss of investor’s confidence, stock price slump, and the decrease of bank’s market value added. Currently, as domestic banks are experiencing integration and merger, the above findings may serve as a reference for bank managers and investors.