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The credit rating industry

Author

Listed:
  • Richard Cantor
  • Frank Packer

Abstract

Investors and regulators have been increasing their reliance on the opinions of the credit rating agencies. This article shows that although the ratings provide accurate rank-orderings of default risk, the meaning of specific letter grades varies over time and across agencies. Noting that current regulations do not explicitly adjust for agency differences, the authors argue that a reassessment of the use of ratings and the adequacy of public oversight is overdue.

Suggested Citation

  • Richard Cantor & Frank Packer, 1994. "The credit rating industry," Quarterly Review, Federal Reserve Bank of New York, issue Sum, pages 1-26.
  • Handle: RePEc:fip:fednqr:y:1994:i:sum:p:1-26:n:v.19no.2
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    Keywords

    Credit;

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