Credit rating agencies face a difficult trade-off between delivering both accurate and stable ratings. In particular … trading when ratings change frequently. Rating agencies generally assign ratings on a through-the-cycle basis whereas banks … stability and accuracy. We find that while through-the-cycle ratings are initially more stable, they are prone to rating cliff …

consequently ratings are a concern for financial stability. While ratings produced by the major CRAs perform reasonably well when … global financial crisis. These failures suggest that ratings should incorporate the obligor's resilience to stress scenarios …) more stringent validation requirements for ratings if they are to be used in capital regulations; and (iii) more …