Are Chinese credit ratings relevant? A study of the Chinese bond market and credit rating industry

Miles LIVINGSTON, Pui-han, Winnie POON, Lei ZHOU*

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

79 Citations (Scopus)


We investigate the nascent but fast-growing Chinese bond market and credit rating industry. We find Chinese bond ratings are informative and significantly correlated with bond offering yields. In addition, the Chinese bond investors distinguish ratings from different credit rating agencies (CRAs), demanding lower yields on bonds rated by global-partnered CRAs. However, the empirical results suggest that the rating scales used by Chinese CRAs are not comparable to those of international CRAs. Furthermore, Chinese CRAs have very broad rating scales and pool bonds with significantly different default risks into a single rating category, resulting in over 90% of bonds in only three rating categories.
Original languageEnglish
Pages (from-to)216-232
Number of pages17
JournalJournal of Banking and Finance
Early online date12 Oct 2017
Publication statusPublished - Feb 2018

Bibliographical note

Poon acknowledges a research grant (LU13501214) from the General Research Fund (GRF), Research Grants Council, Hong Kong and a Business Faculty Research Grant (DB14B2) from Lingnan University, Hong Kong.


  • Bond yield
  • Credit rating
  • Emerging market

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