 Asymmetry in Empowering and Disempowering Private IntermediariesAndreas Kruck The ANNALS of the American Academy of Political and Social Science, 2017, vol. 670, issue 1, 133-151 Abstract: This article analyzes the empowerment and disempowerment of credit rating agencies (CRAs) as private regulatory intermediaries. Until the recent financial crisis, regulators heavily relied on private credit ratings to impose risk-sensitive requirements on financial market actors (targets). Regulatory use of credit ratings was instrumental in empowering CRAs because regulatory authority was delegated to them and their own private power was bolstered by public endorsement. But regulators’ subsequent efforts to disempower the CRAs—more recently regarded as dysfunctional “runaway†intermediaries—have proven costly, complicated to do, and hardly consequential in limiting CRAs’ de facto power. This dynamic reveals a path-dependent power shift in favor of private intermediaries that is more pronounced (1) the larger the intermediary’s own sources of power when an RIT arrangement is established, (2) the larger the transfer of authority to the intermediary, and (3) the longer regulators rely on the intermediary. Keywords: credit rating agencies; regulatory intermediaries; power dynamics; path-dependence; delegation; private authority (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:anname:v:670:y:2017:i:1:p:133-151 Access Statistics for this article More articles in The ANNALS of the American Academy of Political and Social Science |
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