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Sangiorgi, Francesco - 2018

support for unsolicited ratings in recent years as illustrating the theory of the second best. We explore the impact of …

Persistent link: https://www.econbiz.de/10012932453

External Credit Ratings

Benavente, Sergio - 2021

It is well known that credit ratings agencies (CRAs) are a key component of financial markets. But it is less well understood that its decisions reach far beyond the financial system boundaries, and have a direct impact in our daily lives. But, how is that so? If CRAs are important in the...

Persistent link: https://www.econbiz.de/10013238559

Is There a 'Boom Bias' in Agency Ratings?

Dilly, Mark - 2015

Theory predicts rating agencies' incentive conflicts to be stronger in boom periods, thereby leading to biased ratings …

Persistent link: https://www.econbiz.de/10013034962

Who Should Pay for Credit Ratings and How?

Kashyap, Anil K. - 2015

This paper analyzes a model where investors use a credit rating to decide whether to finance a firm. The rating quality depends on the unobservable effort exerted by a credit rating agency (CRA). We analyze optimal compensation schemes for the CRA that differ depending on whether a social...

Persistent link: https://www.econbiz.de/10013035800

Why they keep missing : an empirical investigation of rational inattention of rating agencies

Shagi, Makram el-; Schweinitz, Gregor von - 2017

Although there is a wide consensus that rating agencies have frequently failed to predict major crises, the literature on sovereign ratings has so far mostly focused on explaining the rating level rather than explaining the timing of the rating decision. In this paper we aim to fill this gap in...

Persistent link: https://www.econbiz.de/10011588747

Credit Ratings and Investments

Bayona, Anna; Peia, Oana; Vlahu, Razvan - 2023

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....

Persistent link: https://www.econbiz.de/10014354385

Securitization and moral hazard : evidence from a lender cutoff rule

Bubb, Ryan; Kaufman, Alex - 2009

perapplicant fixed costs in screening. We then demonstrate that our theory fits the data better than the main alternative theory … already in the literature, which supposes cutoff rules are exogenously used by securitizers. Furthermore, we use our theory to …

Persistent link: https://www.econbiz.de/10003941871

Securitization and moral hazard : evidence from credit score cutoff rules

Bubb, Ryan; Kaufman, Alex - 2011 - This version: August 30, 2011

research has hypothesized that these cutoff rules result from a securitization rule of thumb. Under this theory, an observed … model that rationalizes such an origination rule of thumb. Under this alternative theory, jumps in default are not evidence … securitization rule-of-thumb theory but consistent with the origination rule-of-thumb theory. There are jumps in the number of loans …

Persistent link: https://www.econbiz.de/10009298472

Securitization and Moral Hazard : Evidence from Credit Score Cutoff Rules

Bubb, Ryan - 2013

A growing literature exploits credit score cutoff rules used by mortgage lenders as a natural experiment to estimate the moral hazard effect of securitization on underwriting. This research design is premised on the assumption that these cutoff rules are a response by lenders to securitization...

Persistent link: https://www.econbiz.de/10013095622

Banking and Transparency : Is More Information Always Better?

Allenspach, Nicole - 2009

This paper shows that transparency in banking can be harmful from a social planner's point of view. According to our model, enhancing transparency above a certain level may lead to the inefficient liquidation of a bank. The reason lies in the nature of a standard deposit contract: its payoff...

Persistent link: https://www.econbiz.de/10013153062