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Does Europe Need Its Own Rating Agencies?

Author

Listed:
  • Giovanni Ferri

    (University of Bari)

  • Punziana Lacuitignola

    (University of Bari)

Abstract

Monetary unions generally boost financial markets. But European private capital markets have progressed at an unsatisfactory pace even with the euro. What accounts for this? We focus on an increasingly key financial infrastructure: Rating Agencies (RAs). Taking an international perspective, we show that: (i) financial market development increases with the presence of national RAs; (ii) in four studied Asian countries, smaller-sized companies disproportionately hold a rating from national RAs, while disregarding the global RAs (Moody’s, S&P, Fitch). We argue that the absence of European RAs may currently limit the extent of rated companies and financial market evolution in Euroland.

Suggested Citation

  • Giovanni Ferri & Punziana Lacuitignola, 2010. "Does Europe Need Its Own Rating Agencies?," SERIES 0033, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Jul 2010.
    • Handle: RePEc:bai:series:economia-series33
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    References listed on IDEAS

    as
    1. Doron Kliger & Oded Sarig, 2000. "The Information Value of Bond Ratings," Journal of Finance, American Finance Association, vol. 55(6), pages 2879-2902, December.
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    3. Ferri, Giovanni & Liu, Li-Gang & Majnoni, Giovanni, 2001. "The role of rating agency assessments in less developed countries: Impact of the proposed Basel guidelines," Journal of Banking & Finance, Elsevier, vol. 25(1), pages 115-148, January.
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    5. Ferri, Giovanni, 2004. "More analysts, better ratings: Do rating agencies invest enough in less developed countries?," Journal of Applied Economics, Universidad del CEMA, vol. 7(1), pages 1-22, May.
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    Cited by:

    1. Ferri, Giovanni & Lacitignola, Punziana & Lee, Jeong Yeon, 2013. "Foreign ownership and the credibility of national rating agencies: Evidence from Korea," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 762-776.

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    More about this item

    Keywords

    national vs. global credit rating agencies; financial market development;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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