IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Conflicts of interest’s management within credit rating agencies

  • Cristian MARZAVAN

    (Academy of Economic Studies, Bucharest)

  • Tănase STAMULE

    (Academy of Economic Studies, Bucharest)

Registered author(s):

    The recent financial crisis triggered by the spectacular drop of the prices of financial instruments backed by subprime loans brought back into spotlight the role played by the credit rating agencies (CRAs) in the structured finance field. Their importance grew exponentially along with financial globalization and received a substantial support from the Basel Committee II whose newest regulations regarding the risks involved by certain financial assets were tied to ratings issued by specialized institutions. Throughout the time, the regulators took appropriate measures to ensure that the problems raised by the rating activity are avoided – loose competition, lack of transparency, potential conflicts of interest and rating-depending regulation. This paper tried to identify the main conflicts of interest which arise in the rating issuance activity and to outline the means that generate the potential incentives to exploit those conflicts; an important weight was put on the „reputational capital†theory which implies the fact that under the right circumstances, a reputation mechanism that works properly will deter low quality ratings. It tried to follow the correlation between the evolution of the legal framework and the impact on ratings quality, looking to identify remedies in order to avoid and remove conflicts of interest for this specific domain. Based on empirical evidence, the influence of conflicts on market informational flow was put under scrutiny and the long term implications on financial market environment were assessed.

    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:
    Download Restriction: no

    Article provided by Economic Publishing House in its journal Management & Marketing.

    Volume (Year): 4 (2009)
    Issue (Month): 3 (Autumn)

    in new window

    Handle: RePEc:eph:journl:v:4:y:2009:i:3:n:9
    Contact details of provider:

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

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

    When requesting a correction, please mention this item's handle: RePEc:eph:journl:v:4:y:2009:i:3:n:9. 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: (Simona Vasilache)

    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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.