Is there a difference between solicited and unsolicited bank ratings and if so, why ?
AbstractThis paper analyses the effect of soliciting a rating on the rating outcome of banks. Using a sample of Asian banks rated by Fitch Ratings ("Fitch"), I find evidence that unsolicited ratings tend to be lower than solicited ones, after accounting for differences in observed bank characteristics. This downward bias does not seem to be explained by the fact that betterquality banks selfselect into the solicited group. Rather, unsolicited ratings appear to be lower because they are based on public information. As a result, they tend to be more conservative than solicited ratings, which incorporate both public and nonpublic information.
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Bibliographic InfoPaper provided by National Bank of Belgium in its series Working Paper Research with number 79.
Length: 43 pages
Date of creation: Mar 2006
Date of revision:
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Credit rating agencies; Unsolicited ratings; Selfselection; Public disclosure; Accounting transparency;
Other versions of this item:
- Patrick Roy, 2013. "Is There a Difference Between Solicited and Unsolicited Bank Ratings and, If So, Why?," Journal of Financial Services Research, Springer, vol. 44(1), pages 53-86, August.
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ACC-2006-03-18 (Accounting & Auditing)
- NEP-ALL-2006-03-18 (All new papers)
- NEP-FIN-2006-03-18 (Finance)
- NEP-FMK-2006-03-18 (Financial Markets)
- NEP-SEA-2006-03-18 (South East Asia)
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