Efing, Matthias - 2013 - First draft: May, 2012, This version: May 16, 2013
rating agency and the bank corrupts rating quality, rating-independent regulation enhances welfare. The welfare benefits are …This paper models the strategic interaction between a rating agency, a bank and a bank regulator who lacks information … about bank asset risk. The regulator can either (1) make bank capital requirements contingent on credit ratings; or (2) set …