Connect with us

Business

CUHK Business School Research Suggests Supply Chain Health Serves As A New Way To Predict Credit Ratings

Published

on

Advertisements

Investors have used credit ratings to determine a company’s financial risk. However, small- and medium-sized companies (SMEs) are usually excluded from the equation. A Chinese University of Hong Kong (CUHK) Business School-led research promises to even the playing field and transforms how credit ratings are evaluated by studying supply chain issues.

It’s no surprise that ratings on credit impact how a company seeks to raise capital and organize its capital. Investors generally prefer companies with better ratings as they have the slightest chance of default. Businesses strive to achieve better ratings to obtain more lucrative financing options.

But, SMEs are often left out of the race since it’s costly to be regularly evaluated by experts from credit-rating companies. In addition, many SMEs don’t make their financial statements publically. The absence of financial data and ratings for these businesses makes them vulnerable to financing.

To remedy the “missing link” in the credit rating system, a team of experts from CUHK Business School and The University of Cambridge has developed an efficient method to show that supply chain information can significantly improve credit reliability and predictability rating. In this way, SMEs with significant suppliers who regularly release operational and financial information to the market could be rated and have a greater chance of getting better terms. This has implications for regulators, financial institutions, and suppliers’ financiers’ decisions.

What made the researchers decide to concentrate on supply chain issues in credit rating prediction? Wu Jing, Assistant Professor in the Department of Decision Sciences and Managerial Economics at CUHK Business School, points to a variety of research studies that have been conducted in recent times on the impact of suppliers on the overall financial condition of firms.

“We have observed how the bankruptcy of firms can affect the price for their vendors. We’ve seen how the performance of suppliers can alter the equilibrium of a company’s asset prices. In addition, changes to the supply chain can affect other companies that are part of the chain. It’s therefore only normal to think that all information gathered throughout the supply chain, however, in different ways could affect a company’s credit ratings.” Wu says. Wu.

Machine-Learning Comes to Aid

Since the process of analyzing the company and assigning the credit rating is a time-consuming one that demands a lot of time and resources, It has evolved into an expensive tool that only big-scale firms can afford. Recent advancements in machine learning and artificial intelligence technologies offer promising solutions which could help bring the game to a level.

In a study that was conducted recently conducted by the professor. Wu and his collaborators, Sean Zhou, Chairperson of the Department of Decision Sciences and Managerial Economics at CUHK Business School, and Zhang Zhaocheng at the University of Cambridge, employed an algorithm for machine learning to design an algorithmic credit rating prediction model that incorporates supply chain information. The study was entitled Credit Rating Prediction Using Supply Chains: A Machine Learning Methodology.

“The machine learning framework has been compelling in solving prediction problems in recently published economics and finance literature,” says Prof. Zhou. “By leveraging machine learning algorithms over publicly available data sets on supply chains, our work can significantly improve the prediction accuracy of credit ratings.”

Exciting is the fact that this technique can be utilized to determine the credit rating of various businesses that do not reveal any of their personal operational and financial data using the public domain data of their major suppliers.

“As SMEs are often financially constrained and rely on external financing to sustain their operations, assessing their credit ratings in a non-traditional way can help them raise capital more easily,” Professor. Zhou.

Additionally, Dr. Zhou points out that businesses can also further alter their supply chain and operational strategies to increase their ratings after understanding the factors that affect their supply chain and rating.

Robust Predictability

The study’s participants are 1134 U.S. non-financial firms using 2004 through 2019. The information is mainly derived from the 10-K reports from the Compustat database and the Factset Revere observations of supply chains that cover many sources, including transcripts of conference calls and press releases, and websites much more. Each company in the study’s sample includes 11.56 references and 7.57 customers.

With different models of machine learning, The researchers examined the reliability and accuracy of their model and discovered it to be reliable. An improvement of 5 percent in the accuracy ratio was obtained when supply-chain variables were added to the credit rating benchmark forecasting model that doesn’t include supply-chain variables. The team also discovered that their model could predict credit ratings reasonably well with the help of supply chain data by itself, without the focal company’s features.

“This suggests that our approach can apply to a large number of companies whose financial information is not publicly available, such as SMEs,” Prof. Wu remarks.

“Our method of utilizing their supply chain data could evaluate their credit rating. This could be useful to their suppliers and financial institutions in assessing their risk and the design of the financial services and products designed for their needs.” The nuance to the result: The use of supply chain data to predict credit ratings is more valuable and insightful when a business depends more on its supply chain to support its operations. Examples include manufacturing and retail companies. This is the reason financial firms were not included in the study because they aren’t heavily dependent on supply chains to run their business.

The prediction accuracy for retail businesses improved by approximately 8.5 percent after the supply chain variables were added. For manufacturing firms, the accuracy improved by roughly 6.7 percent. Other than manufacturing and retail, the accuracy increased by just 4 percent. The difference is attributed to the degree of dependence on customers and suppliers. The greater the reliance on supply chain partners, the more vital the financial bonds. In the end, credit risk is distributed across this supply chain.

Governments and regulators should be aware of these innovative research studies into the transfer of risk to credit. If the company is in default, its credit risk can be passed on to other companies through the supply chain and, consequently, have a more significant impact on the economy. This research may help inform regulators about the kind of firms they should be monitoring their ratings for credit more attentively to avoid spillover risk. On the other hand, SMEs are responsible for over half of the jobs in the world, but they typically do not have a credit rating and are subject to unfair treatment in the traditional finance market. The research findings can assist government officials in implementing policies that aid SMEs in lowering their costs of financing. In addition, the researchers suggest that government officials should push for using these kinds of automated credit scores that utilize supply chain information and machine learning algorithms, which could improve financial inclusion and economic growth.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published.

Business

5 Mortgage Loan Types | Explained

Published

on

Advertisements

Mortgage loan is popular and oftentimes necessary way to purchase a home or other real estate property. It’s most often taken out by individuals who do not have the financial assets to pay for the property outright. A mortgage loan is essentially a loan given to the borrower from a lending institution in which the borrower agrees to make repayments on that loan amount until the principal of debt is paid off. In this article you will find 5 different types of mortgage loans. let’s go!

Fixed-Rate Mortgage Loan

A fixed-rate mortgage is a mortgage loan that has a fixed interest rate for the entire term of the loan. The monthly payment of a fixed-rate mortgage is the same every month. The interest rate on a fixed-rate mortgage will not change over the life of the loan.

A fixed-rate mortgage is a good choice for borrowers who want to know what their monthly payment will be every month. It is also a good choice for borrowers who plan to stay in their home for a long time. The interest rate on a fixed-rate mortgage may be higher than the interest rate on an adjustable-rate mortgage, but it will not change over time.

There are two types of fixed-rate mortgages: conventional and government-insured. Conventional fixed-rate mortgages are available from many lenders. Government-insured fixed-rate mortgages are backed by the federal government and are available from lenders that participate in government programs.

Adjustable-Rate Mortgage Loan

An adjustable-rate mortgage, also known as an ARM, is a type of mortgage loan in which the interest rate is not fixed. The interest rate may adjust upwards or downwards over the life of the loan in response to changes in the market.

An ARM typically has a lower interest rate than a fixed-rate mortgage loan. However, because the interest rate is not fixed, there is more risk associated with an ARM. Your monthly payments could go up or down depending on how the market changes.

If you are considering an adjustable-rate mortgage, it is important to understand how the interest rate will be calculated and how often it can change. You should also be prepared for the possibility that your monthly payments could increase if rates go up.

FHA Mortgage Loan

An FHA loan is a mortgage insured by the Federal Housing Administration. This type of loan is available to home buyers with a credit score of 580 or higher. down payment of 3.5%. Borrowers with a credit score below 580 may still be eligible for an FHA loan, but they will need to put down 10% for their down payment.

FHA loans are a good option for first-time home buyers or borrowers with limited funds for their down payment. These loans have lower interest rates than other types of loans, and they also come with less strict credit requirements. However, borrowers will need to pay mortgage insurance premiums on their loan.

The Federal Housing Administration offers several different types of FHA loans, including fixed-rate loans and adjustable-rate loans. Borrowers can choose the loan that best fits their needs.

VA Mortgage Loan

A VA loan is a mortgage loan that is guaranteed by the US Department of Veterans Affairs. This type of loan is available to veterans, active duty service members, and reservists. VA loans are available with no down payment and no private mortgage insurance (PMI).

VA loans are a great option for veterans and military members who want to purchase a home. They offer many benefits, including no down payment and no PMI. VA loans are available through private lenders, such as banks and mortgage companies. The US Department of Veterans Affairs guarantees the loan, which means that the lender is protected if the borrower defaults on the loan.

VA loans are a great option for those who are eligible. They offer many benefits and are available through private lenders.

USDA Loan

A USDA loan is a government-backed loan that is available to rural homeowners. This type of loan can be used to purchase a home or to refinance an existing mortgage.

USDA loans are backed by the United States Department of Agriculture (USDA). This means that if you default on your loan, the USDA will pay off the lender. This makes USDA loans very attractive to lenders, as they have little risk involved.

To qualify for a USDA loan, you must meet certain income and credit requirements. You must also be a U.S. Citizen or Permanent Resident and have a valid Social Security number. Additionally, the property you are purchasing must be located in a rural area.

If you are interested in applying for a USDA loan, you should contact your local USDA office or a participating lender.

Pros and Cons of each type of mortgage loan

There are several different types of mortgage loans available, each with its own set of pros and cons.

Fixed-rate mortgage loans have interest rates that remain the same for the life of the loan. This can be advantageous if interest rates rise over time, as your monthly payments will not increase. However, if interest rates fall, you will not be able to take advantage of the lower rates.

Adjustable-rate mortgage loans have interest rates that can change over time. This can be beneficial if interest rates fall, as your monthly payments will decrease. However, if interest rates rise, your monthly payments will also increase.

FHA loans are backed by the Federal Housing Administration and have more lenient qualification requirements than other loans. However, they also have higher insurance premiums and require a down payment of at least 3.5%.

VA loans are available to veterans and active duty military members. They do not require a down payment and have low interest rates. However, they are only available to those who meet certain eligibility requirements.

Conclusion

There are a lot of different mortgage loan types out there, and it can be confusing to try and figure out which one is right for you. But don’t worry — we’re here to help. In this article, we’ve explained the five most common types of mortgage loans so that you can make an informed decision about which one is right for your unique situation. We hope this information has been helpful and wish you the best of luck in finding the perfect mortgage loan for your needs!

Continue Reading

Business

The Key Factors Driving The Growth of Industrial Fans

Published

on

Advertisements

Industrial fans are a vital part of any production setting. They help move air around factories and other buildings, and their use has increased in recent years as more people adopt the technology. Despite their importance, there is little understanding of the factors driving the increasing growth of urban fans.

Industrial fans are becoming more popular as they offer several benefits over traditional air-conditioning systems. One benefit is that these fans can be used in many different environments, making them perfect for businesses and homes. They are easier to operate than traditional air-conditioning systems, so they are great for applications where speed is key, like factories and warehouses.

In this detailed, informative article, you will be explored key factors driving the growth of industrial fans and provide insights for companies looking to adopt them into their production environments.

The Advantages of Having Industrial Fans in the Workplace

Some of The Benefits of Using Industrial Fans Include:

#1. They Save Energy: When combined with an efficient cooling system, industrial fans can save you money on your energy bill.

#2. They Are Louder Than Air Conditioning Systems: These fans are much louder than air conditioning systems, which can be helpful when working in noisy or high-traffic areas.

#3. They Are Less Expensive To Maintain: In addition to being quieter and easier to operate, they also require less maintenance than traditional air-conditioning systems.

How to Choose The Best Industrial Fan for Your Application

You can do a few things to choose the best industrial fan for your needs:

  • Consider what type of room you plan on using your fan in your home, office, or manufacturing plant.
  • Look at how loud your desired noise level is: low-noise fans typically sound louder than high-noise fans, so make sure this is something you are comfortable with before making your purchase.
  • Decide which type of this fan you want: an oscillating or bladed.

Get a Price Quote for the Right Industrial Fan

Once you have a general idea of what type of fan is right for you, it is time to get a price quote. This will allow you to compare different types of industrial fans and find the best deal on the right fan for your needs. To do this, consider what type of fan you are looking for and your budget. Once you have this information, it is easy to find urban fan shops near me that can provide you with a price quote.

The Ultimate Guide To Successfully Using Industrial Fans

When purchasing a fan, it is important to follow the manufacturer’s instructions carefully. Do not force the fan to operate if it cannot do so safely. Make sure that the blade size and type are compatible with the fans you purchase.

Regularly check the fan’s performance by measuring its speed, noise level, and air quality. Do not forget to replace or maintain any parts that may become damaged due to use.

Don’t Let Your Industrial Fans Go To The Dogs: Tips For Regular Maintenance

Regular maintenance can help keep your industrial fan running smoothly and provide consistent airflow. Keep these tips in mind when performing regular maintenance:

  • Replace blades on a schedule that corresponds with manufacturer specs.
  • Clean filters regularly.
  • Inspect impellers for accuracy every 6 months or whenever there is a suspected issue.
  • Check belt tensioners regularly.
  • Maintain cords in good condition.

Protecting Your Investment In Industrial Fans: Tips To Keep Your Fans Running Smoothly

When investing in industrial fans, you should protect them from damage and ensure it runs efficiently. Keep these tips in mind when protecting your fan:

  • Keep the fan in a cool & dry place.
  • Use only authorized parts.
  • Use caution when handling the fan’s blades.
  • Disconnect power to the fan if it becomes damaged or frozen.
  • Clean any spills and dust off the fan before returning it to service.

Conclusion

Industrial fans are growing in popularity due to a variety of reasons. Some benefits of using these fans include reduced noise levels, longer life spans, and improved air quality. If you are interested in purchasing professional fan, carefully research the different types available and find one that best suits your needs.

Continue Reading

Business

Five smart ways to hire quality executives for your business

Published

on

Advertisements

As the business world becomes more competitive, it’s more important than ever to have a strong team of executives leading your company. But how do you go about finding and hiring the best possible candidates? In this article, we’ll give you five smart ways to identify and attract quality executive talent for your business. By following these tips, you’ll be well on your way to putting together a top-notch team that will help take your company to the next level.

Define the role you are looking to fill

Are you looking to hire an Executive? Here are five smart ways to find quality candidates for your business:

1. Define the role you are looking to fill.

It is important that you take the time to consider what kind of executive you need for your business. What specific skills and experience would they need to possess? What kind of personality would work well for your company? Once you have a good understanding of the role you are looking to fill, you can begin your search for the perfect candidate.

2. Use a professional recruiting firm.

There are many great executive recruiting firms out there who can help you find the right candidate for your business. They will have a vast network of qualified executives and can help narrow down your search to the best possible candidates.

3. Utilize social media.

Social media is a great tool for finding executives. Use LinkedIn to search for executives with the specific skills and experience you are looking for. You can also post job descriptions on Twitter and Facebook to reach a wider audience.

4. Ask for referrals from trusted colleagues and contacts.

If you know someone who has hired an executive before, ask them for referrals. They may know

Create a candidate profile

The first step to hiring quality executives is creating a candidate profile. Consider what you want in an executive and what your business needs. Then, create a list of qualifications and attributes that your ideal candidate would possess.

Once you have a clear idea of who you are looking for, you can begin the search for candidates. There are a number of ways to find potential executives, including online job boards, networking, and headhunting.

When searching for candidates, it is important to keep your list of qualifications and attributes in mind. This will help you narrow down your search to only the most qualified candidates.

Once you have found a few potential candidates, the next step is to screen them. This can be done through interviews, reference checks, and background checks. By taking the time to screen candidates, you can be sure that you are hiring the best possible executive for your business.

Use a recruitments agency

If you’re looking to hire quality executives for your business, one smart way to do so is to use a recruitment agency. Recruitment agencies specialize in finding and vetting candidates for executive positions, so you can be sure that the candidates they present to you will be of a high caliber. Plus, using a recruitment agency can save you time and energy in the hiring process.

Advertise the position

To hire quality executives for your business, one of the best ways to reach potential candidates is by advertising the position. Consider using online job boards or even social media platforms to reach a wider audience. You can also work with executive search firms who specialize in placing top talent in businesses like yours.

Make sure that your job posting is clear and concise, and outlines the key responsibilities and qualifications for the role. This will help to attract the right kind of candidates who have the skills and experience you are looking for.

Take your time in reviewing applications and resumes, and conduct thorough interviews with each candidate. This is an important decision for your business, so be sure to take the time to find the right person for the job.

Interview candidates

When hiring an executive, it’s important to find someone who is not only qualified for the job, but also a good fit for your company culture. The best way to get to know a potential candidate is to interview them.

Here are five tips for conducting an effective executive interview:

1. Prepare ahead of time. Make sure you have a list of questions that will help you get to know the candidate’s qualifications, work style, and personality.

2. Ask about their experience. Find out what kinds of companies they’ve worked for in the past and what kinds of positions they’ve held. Ask them about specific challenges they’ve faced and how they coped with them.

3. Determine their motivations. Why did they leave their last job? What are they looking for in a new position? What are their long-term career goals?

4. Probe their knowledge. Ask them about trends in their industry and see if they can think critically about issues that may affect your business.

5. Get a sense of their personality. Is the candidate someone who is easy to work with? Do they have a positive attitude? Do they seem like someone who would

Select the right candidate

The first and most important step to hiring quality executives is to select the right candidate. Look for candidates with the right skills and experience for the job, and who fit well into your company culture.

Once you’ve selected a few candidates, it’s time to start the interview process. Be sure to ask each candidate questions about their experience and qualifications, as well as their goals for the position.

It’s also important to give each candidate a chance to ask questions about the role and the company. This will help you gauge their interest in the position and their fit with your company.

After the interviews are complete, it’s time to make a decision. Choose the candidate who you think will be the best fit for the job and your company. With the right executive in place, you can reach new levels of success.

Onboarding and training

As your business grows, you’ll eventually need to start hiring executives to help manage different aspects of the company. Here are five smart ways to find and onboard quality executives:

1. Use a recruitment firm: Recruitment firms specialize in finding top talent for businesses. They can help you identify potential executive candidates and screen them for fit with your company.

2. Ask for referrals: Talk to other business owners or executives in your network and ask if they know anyone who would be a good fit for your company.

3. Use social media: Social media can be a great way to reach out to potential candidates. Use LinkedIn or Twitter to search for people with the skills and experience you’re looking for.

4. Look for people with complementary skills: When you’re hiring an executive, look for someone whose skills complement those of the other members of your management team. This will help create a well-rounded team that can effectively manage your business.

5. Provide comprehensive onboarding and training: Once you’ve hired an executive, provide comprehensive onboarding and training so they can hit the ground running and be successful in their new role.

Conclusion

As the saying goes, you’re only as good as the people you surround yourself with. This is especially true when it comes to business, and hiring quality executives is crucial to the success of any company. By following these five tips, you can be sure that you’re hiring the best possible candidates for your executive team. With the right people in place, anything is possible.

Continue Reading

Trending