The Financial Determinants of Corporat Creditworthiness: Perspectives from Egypt

Document Type : Original Article

Authors

1 School of Business, The American University in Cairo

2 Arab Academy for Science Technology and Maritime Transport Graduate School of Business

3 Faculty of Business Administration and International Trade Misr International University

Abstract

Evaluating a firm’s creditworthiness has become essential, mainly in recent decades. The promotion of a reliable evaluation model and dependable techniques will help lenders to take initiatives of investment & empower borrowers to access different sources of financing. The aim of this paper is to establish a reliable credit scoring model depending on a set of financial performance indicators independent variable, with consideration of industry dummies and logarithm of firm’s size. The study employed a set of 50 financial indicators for the non-financial firms listed in EGX 50. Industrial financial performance measures were considered via industries financial information obtained by official publish of Egyptian Central Agency for Public Mobilization & Statistics (CAPMAS). The analysis of three models performed, the first model was the original one, which examined the significance of financial indicators standalone in relation to observed developed credit score. The second model examined the industry effect on the first model, while the third examined the size effect. A robust result of the significance of liquidity, assets efficiency & profitability categories for listed firms sample only.

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