A Systematic Review of Credit Rating Variables

Abstract

This study navigates the intricate landscape of credit ratings and their impact on financial markets, particularly during the 2007-2009 financial crisis. It conducts a comprehensive review of research on credit ratings, elucidating the variables shaping them and their repercussions on investor sentiment, business behavior, and economic growth. Employing a systematic literature review methodology, 21 papers from reputable sources such as sciencedirect.com and emerald.com were scrutinized, following established techniques. Stringent selection criteria ensured a thorough examination, with cross-referencing minimizing the risk of omissions. The evaluation process facilitated a nuanced understanding of diverse perspectives on credit ratings and their interrelations. The research aims to unveil insights into the determinants of credit ratings, encompassing corporate cash management decisions, reputational risks, inventory efficiency, and qualitative aspects in debt rating frameworks. Furthermore, it endeavors to elucidate the synergy between market-driven methodologies and credit ratings, as well as their predictive capabilities for bank credit assessments. By amalgamating these findings, the study aspires to furnish valuable insights for economic stakeholders and policymakers grappling with the intricacies of credit rating systems. The results and discussion section underscores the key variables associated with credit ratings, spanning auditing features, microeconomic factors, and macroeconomic indicators. While the literature review offers valuable insights into the intricate nexus between credit rating variables and financial markets, it acknowledges limitations such as a restricted timeframe and the absence of credit ratings as a moderating factor, suggesting avenues for future research endeavors.