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Multiple credit ratings and liquidity creation

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  • Kladakis, George
  • Chen, Lei
  • Bellos, Sotirios K.

Abstract

We examine the relationship between multiple credit rating purchases by banks and liquidity creation using a diverse sample of 486 banks from 71 countries. We show that liquidity creation is negatively associated with the number of ratings purchased by the bank, and that capital can positively moderate this relationship, allowing banks that obtain more ratings to create more liquidity.

Suggested Citation

  • Kladakis, George & Chen, Lei & Bellos, Sotirios K., 2022. "Multiple credit ratings and liquidity creation," Finance Research Letters, Elsevier, vol. 46(PA).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321003433
    DOI: 10.1016/j.frl.2021.102313
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    References listed on IDEAS

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    More about this item

    Keywords

    Banks; Rating agencies; Multiple credit ratings; Liquidity creation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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