Credit Risk Evaluation Based on Social Media

Social media has been playing an increasingly important role for individuals to share their own opinions on many financial issues including credit risk in the investment decision. This paper analyzes whether these opinions transmitted through social media can accurately predict enterprises’ future credit risk. We consider financial statements oriented evaluation results based on logit method as the benchmark. And we then conduct textual analysis to retrieve both posts and their corresponding commentaries published on two most popular social media platforms of financial investors in China. The professional advice from financial analysts is also investigated in this paper. We surprisingly find that the opinions extracted from both posts and commentaries surpass opinions of analysts in terms of credit risk prediction.