Credit rating agencies: are they credible?

John Ryan

International Journal of Public Policy, 2013, vol. 9, issue 1/2, 4-22

Abstract: This paper examines the ongoing reputational crisis of credit rating agencies (CRAs) and asks if the CRAs are playing a credible role in financial markets. The current crisis supports the proposition of scepticism on the credibility of CRAs which did not properly disclose risk and thus contributed to pushing the global financial system to the verge of collapse. There may be a need to restrict the role of CRAs in rating sovereign debt and for increased regulation of CRAs. Credit rating agencies need to be held accountable for their ratings and provide transparency for their methodology. There needs to be more competition for Standard % Poor's, Moody's and Fitch which form an oligopolistic market structure.

Keywords: credit rating agencies; regulation; competition; accountability; Standard % Poor's; Moody's; Fitch; financial crisis; oligopoly; moral hazard; reputational crisis; CRA reputation; financial markets; CRA credibility; sovereign debt; credit ratings. (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijpubp:v:9:y:2013:i:1/2:p:4-22

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