conditions, it may even become cautious and issue bad ratings ignoring both types of information. With competition, however, it …, it may become more likely to issue good ratings in an attempt to protect market power. …

debt crisis. We address this by estimating relationships between sovereign debt ratings and macroeconomic and structural … variables. We then use these equ-ations to decompose actual ratings into systematic and arbitrary components that are not … credit ratings affect credit spreads. We find that both do, which opens the possibility that arbitrary rating downgrades …

Sovereign ratings have frequently failed to predict crises. However, the literature has focused on explaining rating … decision; (iii) markets only react to ratings providing new information; (iv) developed countries get preferential treatment. …

can act conservatively by issuing too many bad ratings when a project is expected to be good based on private and public … information. In a competitive setting, an agency becomes bolder and can issue too many good ratings when a project is expected to … be bad based on private and public information. The paper provides a reason for why competition in the ratings industry …

. In addition to the regulatory efforts in the context of accepting the for-profit business model of ratings, there is a … growing realization that credit ratings bear the characteristics of a public good. Financial market participants need reliable …, transparent and independent assessment of credit risks. Credit ratings are therefore better viewed as an infrastructure matter …

simply enabled structurers to create and maintain tranches of these instruments with unjustifiably high credit ratings. The … second part of the paper suggests how future policy may minimize overdependence on credit ratings, by removing regulatory …

ratings in the Standardized Approach in Basel II. Furthermore it will examine the problem of adverse selection which appears … in Basel II as a result from the proposal for the use of external ratings in determining the risk weights in the …