Advanced Search
MyIDEAS: Login to save this article or follow this journal

Rating Agencies on the International Financial Market: an Approach in Terms of the Transaction Cost Economy

Contents:

Author Info

  • Monica DUDIAN

    (Academy of Economic Studies Bucharest, România)

Registered author(s):

    Abstract

    Rating agencies, by the assigned risk grades, point out the quality of debtors and credit instruments in terms of the probability to cease payments and the recovery possibilities. The existence and development of rating agencies on the capital markets is generally explained by the capacity they have to facilitate transparency and efficiency of markets, by reducing the informational asymmetry between the issuers and investors. It is acknowledged by the professional literature that rating agencies diminish the problems of adverse selection and moral hazard. This paper is another theoretical manner of approach, trying to prove that one of the main explanations of the rating agencies existence is the fact that these organizations allow the economy of the transaction costs. The first part of the article briefly describes the concepts of transaction and transaction costs. Also, this part presents a synthetic image of the role of rating agencies on the capital market. The second part makes an analysis of the transaction with rating, as a contractual transaction and, at the same time, a producer of externalities. The paper explains why the transactions with rating can be considered hybrid mechanisms of governance generating externalities upon the exchanges on the financial markets, allowing the creation of new hybrid organizational structures on these markets. Moreover an attempt has been made to list the main categories of transaction costs saved due to the rating agencies requirements.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.tje.uvt.ro/index.php/tje/article/download/75/pdf
    Download Restriction: no

    Bibliographic Info

    Article provided by West University of Timisoara, Romania, Faculty of Economics and Business Administration in its journal Timisoara Journal of Economics.

    Volume (Year): 3 (2010)
    Issue (Month): 3(11) ()
    Pages: 139-146

    as in new window
    Handle: RePEc:wun:journl:tje:v03:y2010:i3(11):a02

    Contact details of provider:
    Postal: Str. J.H.Pestalozzi nr. 16, 300115, Timisoara
    Phone: 004 0256 592506
    Fax: 004 0256 5925002
    Web page: http://www.feaa.uvt.ro
    More information through EDIRC

    Order Information:
    Postal: 16 J. H. Pestalozzi Street, 300115, Timisoara, Romania
    Email:
    Web: http://www.tje.uvt.ro

    Related research

    Keywords: rating; rating agencies; transaction costs; financial market;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:wun:journl:tje:v03:y2010:i3(11):a02. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Romeo Margea).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.