The Credibility of Credit Ratings

Emilia Klepczarek ()

Knowledge Horizons - Economics, 2015, vol. 7, issue 3, 33-38

Abstract: Credit rating agencies (CRAs) are found to strongly influence the market participants’ decisions. Therefore it is essential to make their assessments credible and accurate. The financial crisis proved that this condition was not met relating to the US financial market. The paper focuses on the case of Lehman Brothers Holding which may be treated as a kind of ‘natural experiment’ – the collapse of this bank is an absolute evidence of its poor condition. Thus, verifying the credibility of ratings requires only reviewing the rating agencies’ assessments in the prebankruptcy period. The author finds that, firstly, the grades didn’t reflect the bad situation sufficiently and secondly, the CRAs responded with a great delay to the detoriating market circumstances.

Keywords: Credit ratings; Accuracy, Lehman Brothers, Risk assessment, Financial crisis, Corporate governance (search for similar items in EconPapers)
JEL-codes: G21 G23 G24 G28 G33 G34 G38 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://orizonturi.ucdc.ro/arhiva/khe-vol7-nr3-2015/Emilia_Klepczarek.pdf (application/pdf)
http://orizonturi.ucdc.ro/arhiva/khe-vol7-nr3-2015/Emilia_Klepczarek.pdf (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:khe:journl:v:7:y:2015:i:3:p:33-38

Access Statistics for this article

More articles in Knowledge Horizons - Economics from Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest Contact information at EDIRC.
Bibliographic data for series maintained by Adi Sava ().