This paper examines the quality of credit ratings assigned to banks in Europe and the United States by the three largest rating agencies over the past two decades. We interpret credit ratings as relative assessments of creditworthiness, and define a new ordinal metric of rating error based on...

It must not be easy being a rating agency. Where corporate debt is concerned, the major credit rating agencies (“CRAs”) are said to be too slow and lagging the market. When the topic is structured finance, the agencies are said to inflate ratings to attract business. And when the subject is...

Credit rating agencies have been a core concern in the reform of the global and European financial architecture prompted by the financial crisis. The European Regulation on Credit Rating Agencies (CRA Regulation) entered into force at the end of 2009. Activities of credit rating agencies and the...

Credit rating agencies (CRAs) bear some responsibility for the financial crisis that started in 2007 and remains ongoing. This is acknowledged by policymakers, market participants, and by the agencies themselves. It soon became clear that, given the depth of the crisis, CRAs would not be able to...