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Rate expectations: What can and cannot be done about rating agencies. Bruegel Policy Contribution 2011/14, October 2011

Véron, Nicolas. (2011) Rate expectations: What can and cannot be done about rating agencies. Bruegel Policy Contribution 2011/14, October 2011. [Policy Paper]

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    Abstract

    Credit rating agencies have been under the spotlight since the beginning of the current financial crisis. They failed in their assessment of US residential mortgage- based securities in the mid-2000s. Nevertheless, investors generally consider credit ratings useful to help form their views on credit risks. The global market for credit ratings is very concentrated, ostensibly as a consequence of high natural barriers to entry. All three leading rating agencies have headquarter functions in the US, but there is no compelling evidence that this has created an analytical bias. Tighter regulation of rating agencies can be envisaged but is unlikely to have a material positive effect on ratings quality. Better standardised public disclosures on risk factors by issuers are the most promising avenue for future improvements in credit risk assessments.

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    Item Type: Policy Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > Single Market > capital, goods, services, workers
    EU policies and themes > Policies & related activities > economic and financial affairs > financial crisis 2008-on and consequences/reforms
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Bruegel (Brussels) > Policy Contributions
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 15 Nov 2011 10:19
    Number of Pages: 9
    Last Modified: 15 Nov 2011 10:19
    URI: http://aei.pitt.edu/id/eprint/32866

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