@techreport{Kraft2004Credit,
abstract = {Credit ratings are commonly used by lenders to assess the default risk,
because every credit is connected with a possible loss. If the
probability of a default is above a certain threshold, a credit will not
be provided. The purpose of this paper is to test whether credit ratings
contribute valuable information on the creditworthiness of firms.
Employing a large sample of Western German manufacturing firms,
we investigate loan defaults. First, we estimate Probit models with
publicly available information. Subsequently, we additionally use a
credit rating and show that it contributes significantly to the regression
fit. However, the publicly available information has an independent
effect aside of the ratings. Simple calculations demonstrate that the
interest rate has to increase significantly to compensate for a possible
loss in case of default, if a firm has a weak rating.},
address = {Mannheim},
author = {Kornelius Kraft and Dirk Czarnitzki},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {C25; G33; 330; Credit Rating; Insolvency; Loan Default; Discrete Regression Models; Kreditw\"{u}rdigkeit; Kreditrisiko; Informationswert; Sch\"{a}tzung; Deutschland},
language = {eng},
number = {04-07},
publisher = {Zentrum f\"{u}r Europ\"{a}ische Wirtschaftsforschung (ZEW)},
title = {Are Credit Ratings Valuable Information?},
type = {ZEW Discussion Papers},
url = {http://hdl.handle.net/10419/24007},
year = {2004}
}
