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Why rating agencies disagree on sovereign ratings

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  • Bernhard Bartels

    (University of Mainz)

Abstract

This paper explores why rating agencies disagree on a country’s sovereign default risk. Specifically, we analyse the sovereign ratings of four agencies and their interactions on an empirical basis. Our findings indicate that the frequency of split ratings and their lopsidedness are the result of uncertainty and the use of different rating methodologies but not of a home bias. Still, rating agencies treat world regions differently. Finally, a small and subscriber-paid agency appears to be more independent but also more volatile in its rating behaviour than the issuer-paid Big Three (Standard and Poor’s, Moody’s and Fitch).

Suggested Citation

  • Bernhard Bartels, 2019. "Why rating agencies disagree on sovereign ratings," Empirical Economics, Springer, vol. 57(5), pages 1677-1703, November.
    • Handle: RePEc:spr:empeco:v:57:y:2019:i:5:d:10.1007_s00181-018-1503-y
    DOI: 10.1007/s00181-018-1503-y
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    References listed on IDEAS

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    Cited by:

    1. Bouye,Eric & Menville,Diane Dorothy, 2021. "The Convergence of Sovereign Environmental, Social and Governance Ratings," Policy Research Working Paper Series 9583, The World Bank.

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