This paper examines the validity of ratings assigned by rating agencies on structured products: ABS and ABS CDO. The rating agencies have been criticized for assigning AAA ratings to the structured products created from mortgages. The ratings might give a false sense of confidence to investors...

Keys, Mukherjee, Seru, and Vig (2010) argue that the evidence presented in Bubb and Kaufman (2009) is based on an inappropriate pooling of loans sold to private-label securitizers with loans sold to the government sponsored enterprises (GSEs). In this paper we investigate the issues raised by...

Credit rating agencies have been heavily criticized both for providing overly optimistic ratings for structured finance products and the timeliness of their rating changes for financial institutions hit hard by the 2007 to 2009 crisis. While the role of rating agencies in the structured finance...

We investigate the network structure of syndicated lending markets and evaluate the impact of lenders' network centrality, considered as measures of their experience and reputation, on borrowing costs. We show that the market for syndicated loans is a, “small world,” characterized by large...

The Basel III Accord has reportedly had an impact on SME financing. In this paper, we aim to highlight the determinants of SME credit worthiness. We use credit history in addition to financial ratios and “hybrid” indicators that have been built by mixing credit history with financial...

We develop a model of credit rating agencies (CRAs) based on reputation concerns. Ratings affect investors' choice and, thereby, also issuers' access to funding and default risk. We show that - in equilibrium - the informational content of credit ratings is inferior to that of CRAs' private...

This paper examines how the information quality of ratings from an issuer-paid rating agency (Standard and Poor's) responds to the entry of an investor-paid rating agency, the Egan-Jones Rating Company (EJR). By comparing S&P's ratings quality before and after EJR initiates coverage of each...

Unlike issuer-paid credit rating agencies (CRAs), investor-paid CRAs are compensated by investors for their rating services. This paper documents that the coverage of an investor-paid rating agency (the Egan Jones Ratings, EJR) increases rated firms' stock price informativeness. To alleviate...

We study how inflated credit ratings affect investment decisions in bond markets using experimental coordination games. Theoretical models that feature a feedback effect between capital markets and the real economy suggest that inflated ratings can have both positive and negative real effects....

This paper explores the implications of systemic risk in Credit Structured Finance (CSF). Risk measurement issues loomed large during the 2007-08 financial crisis, as the massive, unprecedented number of downgrades of AAA senior bond tranches inflicted severe losses on banks, calling into...