Applying Rough Sets Theory to Corporate Credit Ratings

Risk assessment and credit rating are primary criteria to investigate the repayment ability of borrower for financial institution. The amount of corporate bond has increased rapidly in recent years. Bond market in Taiwan has also developed actively. Bond market is thus an indispensable risk index for developing the credit rating mechanism. This study utilizes the rough sets theory and the financial ratios of credit evaluation of TCRI as criteria. Using the semiconductor industry of Taiwan stock market as models, this research finds out several important reference factors that sway enterprise credit rating. The credit rating evaluating criteria are grouped into the following three kinds: good, probably good, probably bad. Results of this study show that the interest expense ratio, debt ratio, receives months, sale months play important roles for overall assessment of enterprises