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IMPACT OF CREDIT RATING AGENCIES ON THE GLOBAL ECONOMY

Monika Dankiewicz (), Sonia Korytkowska () and Wioleta Lewandowska ()
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Monika Dankiewicz: Higher Vocational State School in Wloclawek
Sonia Korytkowska: Higher Vocational State School in Wloclawek
Wioleta Lewandowska: Higher Vocational State School in Wloclawek

No 10/2013, Working Papers from Institute of Economic Research

Abstract: The purpose of this article is to present the activities of credit rating agencies and their impact on the processes of accountability to invest in the wider economy. The global crisis has shown the importance of the activities of credit rating agencies. These companies, assessing the creditworthiness of companies money lenders, but also the same debt instruments have a large impact on global financial markets and the overall economy. Granted ratings translate into concrete decisions for investors in the international economic markets. Credit rating agencies issued ratings in favor of the relevant arguments, but above all its high reputation. However, in the event of bankruptcy of a highly acclaimed company, or errors and poorly defined risk, the agency does not take any responsibility for it. It is this situation occurred and occurred before and during the crisis. During the expansion of the real estate market banks are exposed to a high risk associated with the segment of loans with lower rather than eliminate the risk transfer it to someone else through securitization and issuance of such securities as ABS and CDS. However, unreliable and not entirely objective rating agencies staged these bonds high ratings, rather than a threat, so the risks associated with investments in those instruments were disregarded. You can also have doubts about the ratings issued for the country after the outbreak of the financial crisis and consequently, economic growth and debt. The ratings are in fact taken into account the individual opinions of analysts, so why are so respected rating agencies analysts, and not other institutions or specialists. You can not, of course, to blame the rating agencies for the crisis, but you should think how well they assess the credibility of the government.

Keywords: rating agency; rating; crisis (search for similar items in EconPapers)
Pages: 16 pages
Date: 2013-02, Revised 2013-05
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Published in Problemy gospodarki swiatowej TOM IV, edited by Magdalena Kuczmarska, Ilona Pietryka, Institute of Economic Research and Polish Economic Society Branch in Torun, Torun 2014

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