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Credit Rating Industry: A Helicopter Tour of Stylized Facts and Recent Theories

Author

Listed:
  • Doh-Shin Jeon

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique, School of Economics - SKKU - Sungkyunkwan University [Suwon])

  • Stefano Lovo

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

Abstract

The recent subprime crisis and the ongoing Euro zone crisis have generated an enormous interest in the credit rating industry not only among economists but also among average citizens. As a consequence, we have seen an explosion of the economic literature on the industry. The objective of this survey is to introduce readers to the key stylized facts of the credit rating industry and to the recent theoretical economic literature on this industry.

Suggested Citation

  • Doh-Shin Jeon & Stefano Lovo, 2013. "Credit Rating Industry: A Helicopter Tour of Stylized Facts and Recent Theories," Post-Print hal-00798802, HAL.
    • Handle: RePEc:hal:journl:hal-00798802
    DOI: 10.1016/j.ijindorg.2013.02.004
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    Cited by:

    1. Vanhaverbeke, Steven & Balsmeier, Benjamin & Doherr, Thorsten, 2024. "Mandatory financial information disclosure and credit ratings," Journal of Accounting and Economics, Elsevier, vol. 78(1).
    2. Abad, Pilar & Díaz, Antonio & Escribano, Ana & Robles, M.-Dolores, 2021. "Crossing boundaries beyond the investment grade: Induced trading by rating-contingent investment constraints," Journal of Corporate Finance, Elsevier, vol. 67(C).
    3. Chiwitt, Ulrich, 2014. "Ratingagenturen - Fluch oder Segen? Eine kritische Bestandsaufnahme," Arbeitspapiere der FOM 48, FOM Hochschule für Oekonomie & Management.
    4. Matthieu Bouvard & Raphaël Levy, 2018. "Two-Sided Reputation in Certification Markets," Management Science, INFORMS, vol. 64(10), pages 4755-4774, October.
    5. Chiu, Jonathan & Koeppl, Thorsten, 2014. "Livin’ on the Edge with Ratings: Liquidity, Efficiency and Stability," Queen's Economics Department Working Papers 274661, Queen's University - Department of Economics.
    6. Balios, Dimitris & Thomadakis, Stavros & Tsipouri, Lena, 2016. "Credit rating model development: An ordered analysis based on accounting data," Research in International Business and Finance, Elsevier, vol. 38(C), pages 122-136.
    7. Sunal, Onur & Yağcı, Filiz, 2024. "The determinants of Turkish CDS volatility: An ARDL approach covering COVID period," The Quarterly Review of Economics and Finance, Elsevier, vol. 97(C).
    8. Aggarwal, Nidhi & Singh, Manish K. & Thomas, Susan, 2023. "Do decreases in Distance-to-Default predict rating downgrades?," Economic Modelling, Elsevier, vol. 129(C).
    9. Farkas, Miklós, 2021. "Competition, communication and rating bias," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 637-656.
    10. Heski Bar-Isaac & Rahul Deb & Matthew Mitchell, 2025. "Selling Certification, Content Moderation, and Attention," Papers 2506.12604, arXiv.org.
    11. Stefano Lovo & Philippe Raimbourg & Federica Salvadè, 2022. "Credit rating agencies, information asymmetry and US bond liquidity," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(9-10), pages 1863-1896, October.
    12. Dimitar Rafailov, 2020. "Regulation of Credit Rating Agencies - Different Views and Solutions," Izvestia Journal of the Union of Scientists - Varna. Economic Sciences Series, Union of Scientists - Varna, Economic Sciences Section, vol. 9(2), pages 13-22, August.
    13. Doumpos, Michael & Niklis, Dimitrios & Zopounidis, Constantin & Andriosopoulos, Kostas, 2015. "Combining accounting data and a structural model for predicting credit ratings: Empirical evidence from European listed firms," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 599-607.
    14. Anna Bayona & Oana Peia & Razvan Vlahu, 2023. "Credit Ratings and Investments," Working Papers 776, DNB.
    15. S. M. Rakibul Anwar, 2016. "Credit rating for small and medium enterprises: problems and prospects in Bangladesh," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 6(11), pages 234-245, November.

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    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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