The poor performance of credit ratings of structured finance products in the financial crisis has prompted investigation into the role of credit rating agencies (CRAs) in designing and marketing these products. We analyze a two-period reputation model in which a CRA both designs and rates...

This doctoral dissertation examined the legal liabilities of credit rating agencies (CRAs) in providing credit ratings of collateralized debt obligations (CDOs), which are pointed to cause the current financial crisis. Until now, CRAs abused the favorable legal and regulatory environments of...

The Global Financial Crisis (GFC) has led to a general discussion of the accuracy and declining standards of credit rating agency ratings. Substantial criticism has been directed toward the securitisation market, which has been identified as one of the main sources of the crisis. This study...

The reduced accuracy of credit ratings on structured finance products in the boom just preceding the financial crisis has prompted investigation into the business of Credit Rating Agencies (CRAs). While CRAs have long held that their behavior is disciplined by reputational concerns, the value of...

Credit rating agencies have been widely criticized to issue inflated ratings due to the issuer-pay business model. This paper analyzes the corporate bond rating standards and tests whether reputation concerns are powerful enough to discipline the rating agencies. Through a simple theoretical...

I model direct competition between investor-paid and issuer-paid credit rating agencies (CRAs). Frictions in the form of issuer private benefits induce issuer-paid CRAs to inflate ratings. Investor-paid CRAs optimally generate more accurate ratings, leading to adverse selection for investors...

I analyze a model of competition between credit rating agencies (CRAs). In equilibrium, investors only buy assets that received high ratings from multiple CRAs. This has two contrasting effects on the quality of certification. On the one hand, the issuer needs to pass the screening of multiple...

This paper investigates the economic viability and welfare contribution of alternatives to issuer-paid credit rating agencies (CRAs). To this end, it introduces a heterogeneous competition model for credit and ratings markets. Frictions among issuers or investors induce rating inflation from...

This paper investigates the economic viability and welfare contribution of alternatives to issuer-paid credit rating agencies (CRAs). To this end, it introduces a heterogeneous competition model for lending and ratings markets. Frictions among issuers or investors induce rating inflation from...

Our study documents the direct and spillover costs arising from the loss of reputation for credit rating agencies (CRAs). Credit ratings are essential for a well-functioning debt market, and the integrity of these ratings depends on the reputation of the CRAs. Using data from the unexpected...