Abstract
Market for sovereign ratings is oligopolistic, but it is evolving to become less concentrated. However, decreasing market concentration has significant implications for the quality of sovereign ratings. Using a global dataset of sovereign ratings assigned by S&P, Moody’s, Fitch and Dominion Bond Rating Service (DBRS) during the period of 2000-2016, we find that S&P and Moody’s inflate (deflate) their ratings in response to the increase in Fitch’s (DBRS’s) market share in the previous year. DBRS employs a generous rating policy to succeed in this market. Imposing a regulatory pressure on CRAs weakens their motivation to inflate ratings to win market shares. Their rating strategies also vary across economic cycles.
Key
| Original language | English |
|---|---|
| Publication status | Unpublished - 2018 |
| Event | The Seventeenth European Economics and Finance Society Conference - City University of London, London, United Kingdom Duration: 21 Jun 2018 → 24 Jun 2018 http://www.eefs-eu.org/eefs-conference-in-london-june-2018.html |
Conference
| Conference | The Seventeenth European Economics and Finance Society Conference |
|---|---|
| Abbreviated title | EEFS conference |
| Country/Territory | United Kingdom |
| City | London |
| Period | 21/06/18 → 24/06/18 |
| Internet address |