Ratings, Rating Agencies and the Global Financial System

1. Front Matter

   Pages i-xi

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2. Introduction

   1. Introduction: Ratings, Rating Agencies and the Global Financial System: Summary and Policy Implications

      • Richard M. Levich, Giovanni Majnoni, Carmen M. Reinhart

      Pages 1-15

3. History, Value and Industrial Structure of Credit Rating and Reporting Agencies

   1. Front Matter

      Pages 17-17

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   2. An Historical Primer on the Business of Credit Rating

      • Richard Sylla

      Pages 19-40

   3. The Credit Rating Industry: An Industrial Organization Analysis

      • Lawrence J. White

      Pages 41-63

   4. The Paradox of Credit Ratings

      • Frank Partnoy

      Pages 65-84

   5. Discussion

      • Martin S. Fridson

      Pages 85-88

   6. Discussion

      • Mark J. Fiannery

      Pages 89-95

4. Empirical Evidence on Credit Rating Agencies: Pricing and Regulatory Aspects

   1. Front Matter

      Pages 97-97

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   2. The Role of Credit Ratings in Bank Capital

      • Edward I. Altman, Anthony Saunders

      Pages 99-116

   3. A Guide to Choosing Absolute Bank Capital Requirements

      • Mark Carey

      Pages 117-138

   4. Credit Ratings and the Japanese Corporate Bond Market

      • Frank Packer

      Pages 139-158

   5. How Good is the Market at Assessing Bank Fragility? A Horse Race Between Different Indicators

      • Paola Bongini, Luc Laeven, Giovanni Majnoni

      Pages 159-176

   6. Rating Banks in Emerging Markets: What Credit Rating Agencies Should Learn from Financial Indicators

      • Liliana Rojas-Suarez

      Pages 177-201

   7. Discussion: Altman and Saunders on Relative Credit Risk & Carey on Absolute Credit Risk

      • Richard J. Herring

      Pages 202-212

   8. Discussion

      • Larry D. Wall

      Pages 213-220

   9. Discussion

      • Linda Allen

      Pages 221-224

5. Empirical Evidence on Credit Ratings Agency’s Performance: Macroeconomic Aspects

   1. Front Matter

      Pages 225-225

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   2. Rating Agencies and Financial Markets

      • Graciela Kaminsky, Sergio Schmukler

      Pages 227-249

   3. Sovereign Credit Ratings Before and After Financial Crises

      • Carmen M. Reinhart

      Pages 251-268

Ratings, Rating Agencies and the Global Financial System brings together the research of economists at New York University and the University of Maryland, along with those from the private sector, government bodies, and other universities. The first section of the volume focuses on the historical origins of the credit rating business and its present day industrial organization structure. The second section presents several empirical studies crafted largely around individual firm-level or bank-level data. These studies examine (a) the relationship between ratings and the default and recovery experience of corporate borrowers, (b) the comparability of credit ratings made by domestic and foreign rating agencies, and (c) the usefulness of financial market indicators for rating banks, among other topics. In the third section, the record of sovereign credit ratings in predicting financial crises and the reaction of financial markets to changes in credit ratings is examined. The final section of the volume emphasizes policy issues now facing regulators and credit rating agencies.

• Bank
• banking
• credit risk
• financial market
• financial markets
• rating
• stock market

• Stern School of Business, New York University, USA

  Richard M. Levich

• World Bank, USA

  Giovanni Majnoni

• University of Maryland, USA

  Carmen M. Reinhart

Policies and ethics