IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-1-137-35911-7_3.html
   My bibliography  Save this book chapter

Private Credit Risk

In: Public Credit Rating Agencies

Author

Listed:
  • Susan K. Schroeder

Abstract

The investment and financing decisions of a firm are integrally related to its creditworthiness. There are two broad contexts in which these decisions need to be considered, however. The context in which those decisions are made will influence one’s understanding of the determinants and dynamics of credit or default risk. The first approach rests on a vision that investment is a stabilizing activity. This view underlies mainstream economic and finance theory. The other approach rests on a vision that investment is destabilizing, and it underlies the heterodox, nonmainstream approach(es). The implications of the two stances are explored in this chapter for how they explain and assess default or credit risk. By doing so, some of the sources of the malfunctions, which were identified (in the previous chapter) as compromising the quality of ratings, can be identified. Sluggishness, pro-cyclicality, and other methodological issues might better be explained if creditworthiness were assessed in the context of investment as an inherently destabilizing activity, rather than from a perspective in which it is a stabilizing activity. As such, the discussion yields new insights for improving methods of assessing creditworthiness.

Suggested Citation

  • Susan K. Schroeder, 2015. "Private Credit Risk," Palgrave Macmillan Books, in: Public Credit Rating Agencies, chapter 3, pages 25-72, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-35911-7_3
    DOI: 10.1057/9781137359117_3
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palchp:978-1-137-35911-7_3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.