A study on economic factors affecting credit ratings of Indian companies

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The objective of the research carried out is to understand the impact of selected economic variables (such as Crude Oil Price, GDP, Industrial Production, Exchange Rates, and Inflation) on credit rating of Indian companies.
The sample comprises of 120 rating observations during the period 2012–2016 for a total of 24 companies of India.
Measurement of central tendency – descriptive statistics is used where credit rating is used as dependent variable and five economic factors viz. Crude Oil Price, GDP, Industrial Production, Exchange Rates, and Inflation as the independent variables.
Results from the analysis indicate that the credit rating responds in both linear, as well as nonlinear manner, to selected economic factors. Economic factors such as GDP, Industrial Production, and Exchange Rates have a linear relationship to credit rating, whereas Crude Oil price and Inflation have a non-linear impact upon the credit rating.

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    • Figure 1. Conceptual model
    • Table 1. Ratings based on various credit agencies
    • Table 2. Encapsulated data
    • Table 3. Impact of GDP on credit ratings of select companies during the study period
    • Table 4. Impact of Inflation on credit ratings of select companies during the study period
    • Table 5. Impact of Exchange Rates on credit ratings of select companies during the study period
    • Table 6. Impact of Crude Oil Price on credit ratings of select companies during the study period
    • Table 7. Impact of Industrial Production on credit ratings of select companies during the study period