Are Sovereign Credit Ratings Inflated by Competition?

Huong Vu, Rasha Alsakka, Owain ap Gwilym

Research output: Contribution to conferencePaperpeer-review


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 languageEnglish
Publication statusUnpublished - 2018
EventThe Seventeenth European Economics and Finance Society Conference - City University of London, London, United Kingdom
Duration: 21 Jun 201824 Jun 2018


ConferenceThe Seventeenth European Economics and Finance Society Conference
Abbreviated titleEEFS conference
CountryUnited Kingdom
Internet address


Dive into the research topics of 'Are Sovereign Credit Ratings Inflated by Competition?'. Together they form a unique fingerprint.

Cite this