Abstract
Since the beginning of the last century, rating agencies have specialized in providing assessments relating to the standing of the parties on the market. The agere of these agencies aims, in this sense, at overcoming the distortions that can be realized in the intersection between supply and demand for money holdings.
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Notes
See E. Capriglione, Crisi finanziaria e dei debiti sovrani. L’Unione Europea tra rischi ed opportunità (Turin: Utet Giuridica), 2012, p. 53, and in particular, p. 59.
See W. Poon, “Are unsolicited credit ratings biased downward?” in Journal of Banking & Finance, 2003, Vol. 27, no. 4, p. 593 ff.;
M. Elkhoury, “Credit rating agencies and their potential impact on developing countries”, in AA.VV., Compendium On Debt Sustainability And Development (United Nations, New York, Geneva), 2009, p. 165 ff.; editorial in 5 February 2013 in The New York Times, entitled “Standard & Poor’s Stands Accused”, which points out that “the financial crisis could never have happened without the credit-ratings agencies issuing stellar ratings on toxic mortgage securities that inflated the bubble”.
See F. Partnoy, “How and why credit rating agencies are not like other gatekeepers”, 2006, available on ssrn.com, p. 73 and p. 83 ff. On this point, the author notes that “if the agencies rate bonds only when they receive payment from issuers, their ratings appear less like protected speech. But if the agencies are publishing ‘opinions’ about issuers who are not paying fees, they appear to be acting more like journalists. As noted above, the evidence indicates that financial market participants do not believe that credit ratings are merely the opinions of journalists. If they did, Moody’s shares would be worth $3 billion, not $15 billion. But if credit rating agencies never issued unsolicited ratings, they would appear to be even less like financial publishers and therefore even less likely to be protected by free speech principles”.
See S. Byoun and Y. Shin, Unsolicited credit ratings: theory and empirical evidence, 2002, available on ssrn.com;
J. Kiff, S. Nowak and L. Schumacher, Are rating agencies powerful? An investigation into the impact and accuracy of sovereign ratings, 2012, IMF Working Paper no. 12/23, available on ssrn.com.
See F. Partnoy, “The Siskel and Ebert of financial markets: two thumbs down for the credit rating agencies”, in Washington University Law Quarterly, 1999, Vol. 77, no. 3, p. 629 ff. In particular, the author shows that the reputa-tional capital is closely linked to the credibility of the rater. On this point, it is noted that “three criteria must be satisfied for certification to be credible to outside investors. First, the certifying agent must have reputational capital at stake in the certification activity. In other words, the certifying agent would suffer a loss of future relationships because of reduced trustworthiness if it suggested a fair market value in excess of the offering price. Second, the loss in reputational capital must exceed the gain possible from false certification. Third, the agent’s services must be costly and the cost must be related to the asymmetric information associated with the issuing firm”.
See J. Eaton, M. Gersovitz and J. Stiglitz, “The pure theory of country risk”, in European Economic Review, 1986, p. 481 ff.
J. Kiff and M. Kisser, “Rating through-the-cycle: what does the concept imply for rating stability and accuracy?”, International Monetary Fund, 2013;
E. Altman and H. Rijken, “The effects of rating through the cycle on rating stability, rating timeliness and default prediction performance”, 2005, consultable on papers.ssrn.com;
G. Löffler, “An anatomy of rating through the cycle”, in Journal of Banking & Finance, 2004, Vol. 28, p. 695 ff.
See M. Buchanan, “Crazy money”, in New scientist, 2008, Vol. 19, no. 2665, p. 32 ff.;
J.B. Taylor, “The financial crisis and the policy responses: an empirical analysis of what went wrong”, National Bureau of Economic Research, 2009;
C.A.E. Goodhart, “The background to the 2007 financial crisis”, in International Economics and Economic Policy, 2008, Vol. 4, p. 331 ff.;
M. Hellwig, “Systemic risk in the financial sector: an analysis of the subprime-mortgage financial crisis”, in De Economist, 2009, Vol. 2, p. 129 ff.;
R. Shiller, The subprime solution: How today’s global financial crisis happened, and what to do about it (Princeton: Princeton University Press), 2008.
A. Crockett, T. Harris, F. Mishkin and E. White, Conflicts of interest in the financial services industry: what should we do about them? (London: Centre for Economic Policy Research), 2003.
See F. Amtenbrink and K. Heine, “Regulating credit rating agencies in the European Union. Lessons from Behavioural Science”, in The Dovenschmidt Quarterly, 2013, no.1.
See A. Troisi, Le agenzie di rating. Regime disciplinare e profili evolutivi (Padova: Cedam), 2013, passim.
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© 2015 Angela Troisi
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Troisi, A. (2015). Credit Rating Agencies. In: Siclari, D. (eds) Italian Banking and Financial Law. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/9781137507624_8
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DOI: https://doi.org/10.1057/9781137507624_8
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