User:Puikwan/draft article on Credit Research Initiative

The Credit Research Initiative (CRI) was started in 2009 by the Risk Management Institute (RMI) at National University of Singapore, in a bid to address the criticisms of for‐profit credit rating agencies in a constructive way. It was the first non-profit credit rating tool of its kind. The primary objective of the CRI is to advance scientifically sound credit risk analytical methodologies, and disseminate credit quality assessments for exchange‐listed firms around the globe on a timely basis and free of charge, premised upon the concept of credit ratings as a public good.

Approach to Research
The Credit Research Initiative builds on a proprietary database that currently covers data on over 90,000 listed companies globally, including delisted ones. CRI adopts a creative approach to research rarely used in finance and economics by inviting external research teams to participate in a "selective Wikipedia" approach. These external teams are invited to test their models and methodologies on the database; as the Credit Risk Initiative is non-profit, the external teams will be able to retain their Intellectual Property (IP) rights. Research teams will share the common research infrastructure, but compete to get their models adopted for the CRI ratings. Parallel implementations for different rating models will be run for consideration. The selection of the rating model will be done objectively, based on statistical superiority on a common dataset. In this way, the CRI rating model can be constantly challenged and improved upon.

The current PD model and associated results are released as a benchmark for all of the modelling teams, current and future.

Methodology
The current CRI methodology is based on the forward intensity approach of multiperiod corporate default prediction, which is built upon the foundation of a public good approach to credit ratings. The adopted default prediction model is documented in a technical report accessible via the web portal and made available to the general public to adopt the developed model in full or in part for their various research or commercial purposes. In contrast to typically broad classes of letter based ratings, the CRI produces more granular credit information via Probabilities of Default (PD).

Coverage
As of August 2012, the CRI covers around 53,000 listed firms (including delisted ones) in 46 economies in Asia-Pacific, North America, Europe and Latin America. Of the 36,600 active firms under the CRI coverage, over 29,000 firms have sufficient data to release daily updated probabilities of default.

CRI Publications
Besides issuing daily probabilities of default, the CRI also produces publications to supplement its work.

Corporate Vulnerability Index (CVI)
In July 2012, RMI launched its Corporate Vulnerability Index (CVI). This series of indices are "bottom-up" measures of the corporate credit market, and can be treated as stress indicators that reflect heightened credit risks in the corporate sector from three different angles. A possible enhancement is the development of derivative instruments (futures, swaps, options) based on CVIs that can be used for crisis hedging.

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