Credit Rating Agencies, Finance and Growth
AbstractThe aim of this chapter is to initiate a reflection about the potential connection between Credit Rating Agencies (CRA) performance and long-run macroeconomic performance based on the idea that inaccurate and volatile rating decisions can hinder the development of the financial system and therefore growth. This reflection is illustrated by means of the analysis of the evolution and correlations between relevant data on financial system development and growth for a sample of countries from the Euro Zone over the period 1990-2010. The preliminary descriptive analysis seems to corroborate the former concern since we found a positive correlation between different indicators of the development of the financial system, respectively, liquid liabilities, domestic credit to the private sector, and stock market capitalization, and real per capita output. The concerns with the economic impact of the functioning and performance of CRA should thus, in our opinion, also take a longer term perspective since they are a pillar of the financial system, which in turn is fundamental to sustain economic growth. Further restructuring and new interventions in the sector are needed in order to increase transparency and efficiency of CRA activity, preventing in this way longer term consequences in terms of growth potential.
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Credit Rating Agencies; financial system; economic growth;
Find related papers by JEL classification:
- G0 - Financial Economics - - General
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ross Levine & Norman Loayza & Thorsten Beck, 2002.
"Financial Intermediation and Growth: Causality and Causes,"
Central Banking, Analysis, and Economic Policies Book Series, Central Bank of Chile,
in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (S (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084
Central Bank of Chile.
- Levine, Ross & Loayza, Norman & Beck, Thorsten, 2000. "Financial intermediation and growth: Causality and causes," Journal of Monetary Economics, Elsevier, Elsevier, vol. 46(1), pages 31-77, August.
- Levine, Ross & Loayza, Norman & Beck, Thorsten, 1999. "Financial intermediation and growth : Causality and causes," Policy Research Working Paper Series 2059, The World Bank.
- Beck, T.H.L. & Levine, R. & Loayza, N., 2000. "Financial intermediation and growth: Causality and causes," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-3125519, Tilburg University.
- Thorsten Beck & Ross Levine & Norman Loayza, 1999. "Financial Intermediation and Growth: Causality and Causes," Working Papers Central Bank of Chile, Central Bank of Chile 56, Central Bank of Chile.
- Marwan Elkhoury, 2007. "Credit Rating Agencies And Their Potential Impact On Developing Countries," UNCTAD Discussion Papers, United Nations Conference on Trade and Development 186, United Nations Conference on Trade and Development.
- Rabah Arezki & Bertrand Candelon & Amadou Sy, 2011. "Sovereign Rating News and Financial Markets Spillovers: Evidence from the European Debt Crisis," CESifo Working Paper Series 3411, CESifo Group Munich.
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