Abstract:

The tides of the Internet finance stimulate financial institutions and Internet business companies to enlarge their market shares. The present Internet finance in China concentrates on financial rules and the risk control, and almost every market player encounters the problem on credit evaluation. The whole calculation process is simulated by applying the KMV model, and the asset value volatility (σA), distance to default (DD) and expected default frequency (EDF) of 18 public companies in China are obtained. The results proves that KMV is feasible and effective in calculating credit risks in the present Internet finance in China and lays a foundation for the further study on building a reliable and standardized system to evaluate the credit risks of on-line transactions.

Key words: KMV model, Internet finance, credit risk, risk calculation