Credit Rating Agencies, Financial Market Stability and Efficiency

2011 ◽  
Author(s):  
Christina E. Bannier ◽  
Marcel Tyrell
Keyword(s):  
Financial Market ◽  
Credit Rating ◽  
Credit Rating Agencies ◽  
Rating Agencies ◽  
Market Stability ◽  
Financial Market Stability

Part II The Financial Crisis of 2007–2011, 6 Market and Regulatory Failure

2018 ◽  
Author(s):  
Mccormick Roger ◽  
Stears Chris
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Credit Risk ◽  
Financial Market ◽  
Credit Rating ◽  
Third Party ◽  
Credit Rating Agencies ◽  
Rating Agencies ◽  
Market Participants ◽  
Regulatory Failure

This chapter first discusses the origins of the financial crisis, highlighting practice of ‘packaging and selling’ credit risk by financial market participants that led up to the crisis. It argues that although, in retrospect, many aspects of that practice look very bad indeed, the idea that banks might originate a credit exposure and then transfer the credit risk attached to it to a third party was, before the financial crisis, considered to be part and parcel of sound risk management. The discussion then turns to credit-rating agencies. Analysis of the financial crisis and ‘what went wrong’ has shown that rating agencies were too generous with their rating of many of the structured products that contributed to the collapse.

Effects of fiscal credibility on sovereign risk: evidence using comprehensive credit rating measures

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Gabriel Caldas Montes ◽  
Julyara Costa
Keyword(s):  
Risk Perception ◽  
Financial Market ◽  
Public Debt ◽  
Credit Rating ◽  
Credit Rating Agencies ◽  
Sovereign Risk ◽  
Content Type ◽  
Rating Agencies ◽  
Sovereign Credit ◽  
Long Run

PurposeSince sovereign ratings provided by credit rating agencies (CRAs) are a key determinant of the interest rates a country faces in the international financial market and once sovereign ratings may have a constraining impact on the ratings assigned to domestic banks or companies, some studies have focused on identifying the determinants of sovereign credit risk assessments provided by CRAs. In particular, this study estimates the effect of fiscal credibility on sovereign risk using four different comprehensive credit rating (CCR) measures obtained from CRAs' announcements and two different fiscal credibility indicators.Design/methodology/approachWe build comprehensive credit rating (CCR) measures to capture sovereign risk. These measures are calculated using sovereign ratings, the rating outlooks and credit watches issued by the three main credit rating agencies (S&P, Moody's and Fitch) for long-term foreign-currency Brazilian bonds. Based on monthly data from 2003 to 2018, we use different econometric estimation techniques in order to provide robust results.FindingsThe results indicate that fiscal credibility exerts both short- and long-run effects on sovereign risk perception, and macroeconomic fundamentals are important long-run determinants.Practical implicationsSince fiscal credibility reflects the government's ability to maintain budgetary balance and sustainable public debt, the government should keep its commitment to responsible fiscal policies so as not to deteriorate expectations formed by financial market experts about the fiscal scenario and, thus, to achieve better credit assessments issued by CRAs with respect to sovereign debt bonds. Sovereign credit rating assessment is a voluntary practice. It is up to the country whether they want to apply for a rating assessment or not. Thus, without a sovereign rating, one must find an alternative to measure the sovereign risk of a country. In this sense, an important practical implication that this study provides is that fiscal credibility can be used as a leading indicator of sovereign risk perceptions obtained from CRAs or even as a proxy for sovereign risk.Originality/valueThis paper is the first to verify how important the expectations of financial market experts in relation to the fiscal effort required to keep public debt at a sustainable level (i.e. fiscal credibility) are to sovereign risk perception of credit rating agencies. In this sense, the study is the first to address this relation, and thus it contributes to the literature that seeks to understand the determinants of sovereign ratings in emerging countries.

scholarly journals BANK CREDIT RATINGS AS A RELIABILITY INDEX: (OBJECTIVITY OR A FINANCIAL MARKET DEMAND)

Banking law ◽  
2020 ◽  
Vol 6 ◽  
pp. 7-19
Author(s):  
Gulnara F. Ruchkina ◽  
Keyword(s):  
Financial Market ◽  
Reliability Index ◽  
Credit Rating ◽  
Credit Ratings ◽  
Bank Credit ◽  
Credit Rating Agencies ◽  
Financial Indicators ◽  
Market Demand ◽  
Rating Agencies ◽  
The Law

Separate provisions of the law regulating the activities of credit rating agencies are analyzed. Attention is drowned to the implementation of the provisions of this law, which is implemented by by-laws of the Bank of Russia. Examples of ratings assigned to banks by financial supermarkets are given, as well as up-to-date information in the form of tables about credit ratings assigned to banks. It are concluded that the ratings assigned to banks are more informative in comparison with the financial indicators of banks posted on official websites, as part of the assessment of their financial reliability.

scholarly journals Present and Future Position of Credit Rating

2012 ◽  
Vol 12 (2) ◽  
pp. 160-174
Author(s):  
Danuta Dziawgo
Keyword(s):  
Financial Market ◽  
Credit Rating ◽  
Safety System ◽  
Rating System ◽  
Credit Rating Agencies ◽  
Work Quality ◽  
Rating Agencies ◽  
The Future ◽  
Future Position

Abstract The aim of the elaboration is to draw attention to selected aspects of credit rating. For that reason, comparison and induction methods were used. The article deals with credit rating and its present importance for the financial market. On that basis, possible scenarios for credit rating importance in the future will be analysed. Nowadays, the credit rating system and credit rating agencies’ behaviour and work quality are discussed worldwide. Therefore, the article can be seen as a voice in the discussion about future architecture of financial market and safety system net.

Artikel 35a Rating-VO und das Internationale Privatrecht

2021 ◽  
Author(s):  
Kerstin Mehrmann
Keyword(s):  
International Law ◽  
Financial Market ◽  
Credit Rating ◽  
Economic Loss ◽  
Credit Rating Agencies ◽  
Private International Law ◽  
Special Committee ◽  
Conflict Of Laws ◽  
Rating Agencies

The major role of the Rome II Regulation within Art. 35a of the CRA Regulation challenges investors, issuers and Credit Rating Agencies but also the courts. This book deals with the difficulties of applying the Rome II Regulation on financial market torts using the example of the liability of Credit Rating Agencies. The problem of where exactly economic loss occurs is discussed as well as the need for a new Conflict of Laws rule for financial torts. In this context, the proposal by the Special Committee on Financial Market Law of the German Council for Private International Law is analyzed, also taking into account the materialization of European Private International Law.

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