The application of the grey relational analysis in the credit evaluation of group enterprises

With the exposure of serious problems in a series of enterprise groups such as Lantian Group, Yinguangxia Group, Delong and Nanhai huaguang Group, the credit risks stand out for those commercial banks, which provide loans to these enterprise groups. Enterprise groups have complicated of organizational structure and concealed internal transactions, which mean that enterprise groups are grey systems. However, commercial banks matching credit evaluation and credit management at their developing stages lack of a whole objective technology that is suitable for management regulations and credit rating system. Based on investigation and research on persons, this paper proposes specially credit evaluation index system of group enterprises, including quantitative and qualitative indexes. It processes these indexes by principal component analysis method and entropy method based on grey relational analysis model of the credit score values of enterprises. Finally, it evaluates grey relational grade of credit risk between parent corporation and its subsidiary about Group “QiaQia”. The results of this analysis are consistent with practice.