Statistical model for rating Indian firms

Abstract

In the wake of financial crises like the Asian Crisis of 1997 and more recently the 2008 collapse following the bankruptcy of Lehman Brothers, the credibility of ratings issued by credit ratings agencies have come into sharp focus. The primary purpose of the credit ratings system is to provide a means to predict the likelihood of default, and this project proposes a quantitative model with significant predictive power. The model is based upon Altman’s method, but customized for Indian firms. Objective: To minimize the impact of subjective inputs that goes into credit ratings