Over the past decade there has been mixed evidence on the lead-lag relation between issuer-paid and investor-paid credit rating agencies. We investigate the lead-lag relationship for changes in bond ratings (BRs) and financial strength ratings (FSRs), for the US insurance industry, where FSRs...

Economic theory predicts that credit ratings provide monitoring and certification benefits that can lower the cost of borrowing. This study that compares offering yield spreads of rated and unrated corporate bonds does not find support for this prediction, when controlling for issuers’ credit...

This article explores the question of whether bond insurers are able to sufficiently evaluate the credit risk of insured bonds, the answer to which would determine the future of municipal bond insurance. A sample of insured municipal bonds is investigated to determine whether bond insurance...

This study investigates whether banks and insurance corporations perform regulatory arbitrage by buying bonds with inflated credit ratings. We argue that credit rating based capital requirements incentivize banks and insurance corporations to hold more bonds with inflated credit ratings. We...

Credit Rating Agencies (CRAs), an important financial intermediary acts as a gatekeeper to the financial markets by influencing the investor and regulating the issuer’s access to the financial markets. In India, Securities and Exchange board of India (SEBI) brought rating agencies under its...

Credit Rating Agencies (CRAs) acts an important financial intermediary and gatekeeper. They work with regulators in framing policies and laws for regulating the market. They are mentioned in many statutory regulations of SEBI, IRDA, RBI, NSIC etc. There are seven registered credit rating...

We study the impact of financing constraints on corporate risk management. Using data on credit scores matched with unique information on firm level commercial insurance purchases, we find that financing constraints lead to higher insurance spending. We adopt a regression discontinuity design...

I examine the effects of contemporaneous credit rating and watchlist announcements on the over-the-counter U.S. corporate bond market. I find significant negative daily abnormal returns (-2.91%) over a ten-day window associated with a downgrade announcement with negative watch. The effect is...

A firm's current leverage ratio is one of the core characteristics of credit quality used in statistical default prediction models. Based on the capital structure literature, which shows that leverage is mean-reverting to a target leverage, we forecast future leverage ratios and include them in...

The main goal of the research is to study the opportunities for active utilization of credit scoring in the banking, as well as the financial sectors and methods for mutual ensuring of interests of market participants. The article addresses the indicators, that affect the formation of scoring,...