Estimating expected credit losses on banks' portfolios has long been difficult. The issue has become of increasing interest to academics and regulators, as the FASB and IASB consider new regulations for impairment of loans. This study develops a measure of the one-year-ahead expected rate of...

This study develops a timely and unbiased measure of expected credit losses. The expected rate of credit losses (ExpectedRCL) is a linear combination of various non-discretionary credit risk-related measures disclosed by banks. ExpectedRCL performs substantially better than net charge-offs,...

Estimating expected credit losses on banks' portfolios is difficult. The issue has become of increasing interest to academics and regulators with the FASB and IASB issuing new regulations for loan impairment. We develop a measure of the one-year-ahead expected rate of credit losses (ExpectedRCL)...

Bank lending standards vary over time. Periods in which firms find it relatively easy to borrow are followed by periods in which banks scrutinize borrowers more and tighten lending. We predict that changes in lending standards affect the accounting conservatism of bank-dependent firms. Using (i)...

We investigate a prominent allegation in Congressional hearings that Moody's loosened its standards for assigning credit ratings after it went public in the year 2000 in an attempt to chase market share and increase revenue. We exploit a difference-in-difference design by benchmarking Moody's...

We investigate a prominent allegation in congressional hearings that Moody's loosened its rating standards to chase revenue after it went public in 2000. Consistent with this allegation, Moody's ratings for both corporate bonds and structured finance products are significantly more favorable to...

This paper addresses regulatory concerns that large shareholders of credit rating agencies may influence the rating process. Unlike S&P which is a privately held division of McGraw Hill, Moody's is a public company listed on the NYSE. Over the period 2001 to 2010, Moody's had two shareholders,...