Credit risk is crucial for all companies and privates. It was obvious especially in
period of 2008-2010, when many developed economies experienced a recession, due
to financial crisis.
In the relevant literature, among the suggested methodologies to measure and manage
this kind of risk, credit scoring models are included. They usually utilize accounting
data, which convey crucial information about vital functions of a company.
In the current study, we tried to record the most popular methodologies as well as to
indirectly test the relevance of liquidity, profitability and capital structure to credit
risk. More particularly, given that liquid, profitable and properly funded companies
convey less credit, we assumed that such companies should exhibit a satisfactory
performance. We assumed therefore, that liquidity, profitability and capital structure
should be strongly related to a company’s common return.
Analyzing the data of 80 companies, listed in the Athens Stock Exchange, we
concluded that the above assumption didn’t hold, at least for the period under study
(2000-2007).
(EL)
University of Peiraeus
