Are Rating Agencies Powerful? An Investigation Into the Impact and Accuracy of Sovereign Ratings
We find that Credit Rating Agencies (CRA)''s opinions have an impact in the cost of funding of sovereign issuers and consequently ratings are a concern for financial stability. While ratings produced by the major CRAs perform reasonably well when it comes to rank ordering default risk among sovereigns, there is evidence of rating stability failure during the recent global financial crisis. These failures suggest that ratings should incorporate the obligor''s resilience to stress scenarios. The empirical evidence also supports: (i) reform initiatives to reduce the impact of CRAs'' certification services; (ii) more stringent validation requirements for ratings if they are to be used in capital regulations; and (iii) more transparency with regard to the quantitative parameters used in the rating process.Guttler, Andre, 2009, aLead-lag Relationships and Rating Convergence among Credit Rating Agencies, a Research Paper 09-14 (London: European Business School). Hand, John, Robert Holthausen, and Richard Leftwich, 1992, aThe Effect ofanbsp;...
| Title | : | Are Rating Agencies Powerful? An Investigation Into the Impact and Accuracy of Sovereign Ratings |
| Author | : | International Monetary Fund |
| Publisher | : | International Monetary Fund - 2012-01-01 |
You must register with us as either a Registered User before you can Download this Book. You'll be greeted by a simple sign-up page.
Once you have finished the sign-up process, you will be redirected to your download Book page.
How it works:- 1. Register a free 1 month Trial Account.
- 2. Download as many books as you like (Personal use)
- 3. Cancel the membership at any time if not satisfied.
