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The Failures of Credit Rating Agencies during the Global Financial Crisis – Causes and Possible Solutions

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  • Dimitar Rafailov

    (University of National and World Economy, Sofia, Bulgaria)

Abstract

The adequacy of credit ratings is crucial for normal functioning of debt markets. Failures of credit rating agencies have strengthened the negative effects of global financial crisis, generating additional systemic risk. The errors of the agencies can be explained by many reasons as business models, conflicts of interest and absent or ineffective regulation of their activities. To overcome these major problems, we can apply different approaches. The best solution is to improve regulatory practices, combining it with limiting the regulatory status of rating agencies.

Suggested Citation

  • Dimitar Rafailov, 2011. "The Failures of Credit Rating Agencies during the Global Financial Crisis – Causes and Possible Solutions," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 1, pages 34-45, Janyary.
    • Handle: RePEc:nwe:eajour:y:2011:i:1:p:34-45
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    References listed on IDEAS

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    1. Altman, Edward I. & Rijken, Herbert A., 2004. "How rating agencies achieve rating stability," Journal of Banking & Finance, Elsevier, vol. 28(11), pages 2679-2714, November.
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    Cited by:

    1. Deimante Teresiene & Beatrice Gudaviciute, 2021. "Counterparty risk management framework: theoretical approach in COVID-19 environment," Technium Social Sciences Journal, Technium Science, vol. 17(1), pages 184-193, March.
    2. repec:thr:techub:10017:y:2021:i:1:p:184-193 is not listed on IDEAS

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    More about this item

    Keywords

    credit rating; rating agencies; financial crisis; regulation;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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