The effects of international off-site surveillance on bank rating changes

The effects of international off-site surveillance on bank rating changes This article explores the determinants for off-site surveillance of short and long-term bank rating changes for rated banks in Asia, and the differences between them. An ordered logit model reveals that the CAMEL criteria for asset quality and capital adequacy and other financial variables such as asset size and mergers and acquisitions (M&A) play an important role that influences both the short-term and long-term bank ratings. Notably, it is found that higher capital to loan ratio and greater liquid asset ratio are likely to improve the probability of long-term creditworthiness, while higher impaired loan ratios are less likely to improve the short-term bank ratings. Results of the marginal effect suggest that the dividable scale helps to improve long-term creditworthiness through cross-selling tactics, synergy gains, and a better capability for fund raising. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Quality & Quantity Springer Journals

The effects of international off-site surveillance on bank rating changes

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Publisher
Springer Netherlands
Copyright
Copyright © 2010 by Springer Science+Business Media B.V.
Subject
Social Sciences; Methodology of the Social Sciences; Social Sciences, general
ISSN
0033-5177
eISSN
1573-7845
D.O.I.
10.1007/s11135-010-9327-7
Publisher site
See Article on Publisher Site

Abstract

This article explores the determinants for off-site surveillance of short and long-term bank rating changes for rated banks in Asia, and the differences between them. An ordered logit model reveals that the CAMEL criteria for asset quality and capital adequacy and other financial variables such as asset size and mergers and acquisitions (M&A) play an important role that influences both the short-term and long-term bank ratings. Notably, it is found that higher capital to loan ratio and greater liquid asset ratio are likely to improve the probability of long-term creditworthiness, while higher impaired loan ratios are less likely to improve the short-term bank ratings. Results of the marginal effect suggest that the dividable scale helps to improve long-term creditworthiness through cross-selling tactics, synergy gains, and a better capability for fund raising.

Journal

Quality & QuantitySpringer Journals

Published: Apr 23, 2010

References

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