China's Corporate Default Risk Forecasting Revolutionizes Financial Stability Measures
Forecasting corporate default risk in China is crucial for regulators and investors. A study analyzed default events in China and found that the commonly used structural model does not fully capture default risk. Minor and major defaults were classified, revealing that surviving minor defaults behave differently. The determinants of default risk in China differ from the United States, with increasing cash holdings being a key indicator of default. This research significantly enhances the accuracy of predicting corporate default risk in China.