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Using the Tools of Industrial Organization to Illuminate the Credit Rating Industry

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  • Lawrence J. White

Abstract

Until slightly more than a decade ago, the credit rating industry was largely a little-recognized and little-understood part of the financial system “plumbing†. This obscurity changed with the financial crisis of 2008 and its aftermath. After a few years of intensive attention, however, the CRAs have retreated back to semi-obscurity and attract little media or political attention. The tools of industrial organization (IO) can help us understand this industry: its structure; its behavior; and its outcomes; and the public policies that are likely to improve its functioning.

Suggested Citation

  • Lawrence J. White, 2019. "Using the Tools of Industrial Organization to Illuminate the Credit Rating Industry," Working Papers 19-02, New York University, Leonard N. Stern School of Business, Department of Economics.
  • Handle: RePEc:ste:nystbu:19-02
    as

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    File URL: http://w4.stern.nyu.edu/economics/docs/workingpapers/2018/WhiteCRAsforJER.pdf
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    References listed on IDEAS

    as
    1. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-641, August.
    2. Lawrence J. White, 2013. "Credit Rating Agencies: An Overview," Annual Review of Financial Economics, Annual Reviews, vol. 5(1), pages 93-122, November.
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    More about this item

    Keywords

    credit rating agency (CRA); prudential regulation; barriers to entry; asymmetric information;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other

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