Credit rating agencies and global financial crisis: Need for a paradigm shift in financial market regulation
Purpose – This paper attempts to identify the areas for further research related to regulating credit-rating agencies (CRAs), in order to assess whether the prerequisite for a “complete change” is present so to achieve a genuine paradigm shift on the matter. Design/methodology/approach – An overview of the unregulated background of CRAs is presented followed by the European Union's and USA's regulatory initiatives together with a critical assessment of the former and an identification of the substantive areas for further thinking. Findings – The adequacy of the recent CRAs regulation is questioned in the light of the need to take account of crucial elements such as scope, use of methodologies, due diligence and the regulatory reliance on ratings. A definition of competition is also warranted as well as a questioning of the “issuer pays” model and an assessment of the impact of ratings on systemic risk. An alternative regulatory response could take a more general view of regulating the credit-rating activity as a whole and on a world wide scale. Originality/value – This paper identifies areas for further research needed for an assessment of the most suitable regulation for the credit-rating activity. Also, the paper focuses on the need to better understand the complicated nature, functioning and impact of CRAs in the financial system in order to map the different challenges for regulators, politicians, practitioners and academics.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 27 (2010)
Issue (Month): 2 (June)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://emeraldgrouppublishing.com/products/journals/journals.htm?id=sef Email:
References listed on IDEAS
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.:
- Arnoud W. A. Boot & Todd T. Milbourn, 2002.
"Credit Ratings as Coordination Mechanisms,"
William Davidson Institute Working Papers Series
457, William Davidson Institute at the University of Michigan.
- Amadou N.R. Sy, 2009.
"The Systemic Regulation of Credit Rating Agencies and Rated Markets,"
World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 10(4), pages 69-108, October.
- Amadou N. R. Sy, 2009. "The Systemic Regulation of Credit Rating Agencies and Rated Markets," IMF Working Papers 09/129, International Monetary Fund.
- Cantor, Richard, 2004. "An introduction to recent research on credit ratings," Journal of Banking & Finance, Elsevier, vol. 28(11), pages 2565-2573, November.
- Forster, Josef, 2008. "The Optimal Regulation of Credit Rating Agencies," Discussion Papers in Economics 5169, University of Munich, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:eme:sefpps:v:27:y:2010:i:2:p:161-174. 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: (Louise Lister)
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.