Significance of Financial and Non Financial Information on Credit Rating: An Empirical Study on Banking and Insurance Sectors of Pakistan

• Published in: Journal of Accounting and Finance in Emerging Economies Vol. 7; no. 3; pp. 757 - 765
• Main Authors: Rashid, Muhammad Khalid, Haq, Muhammad Noor ul, Khalid, Umair, Basit, Abdul
• Format: Journal Article
• Language: English
• Published: CSRC Publishing 30-09-2021
• Subjects: Credit Rating; Financial and non-financial Information; Financial and non-financial Sector
• ISSN: 2519-0318; 2518-8488
• DOI: 10.26710/jafee.v7i3.1986

Purpose: Apart from standard spheres of financial institutions’ performance such as asset quality, profitability, liquidity and efficiency; the study investigates the influence of non-financial factors such as governance and management.
Design/Methodology/Approach: This study utilizes 2009 through 2018 data for the sample of commercial banks and insurance companies of Pakistan to analyze the significance of financial and non-financial information on credit rating. The study is done by employing frequently used Fully Modified Ordinary Least Square (FMOLS).
Findings: The main contribution lies including explanatory variables from various areas that have an impact on the financial position of the examined banks and insurance companies.
Implications/Originality/Value: The obtained results suggest that the combined use of financial and non-financial information tends to a significant impact on credit rating.