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Regulation of Credit Rating Agencies - Evidence from Recent Crisis

Author

Listed:
  • Mai Hassan

    (Faculty of Management Technology, The German University in Cairo)

  • Christian Kalhoefer

    (Faculty of Management Technology, The German University in Cairo)

Abstract

The importance of ratings for investors’ decisions and for the perceptions of the financial health of a nation pointed out the need that credit rating agencies should be regulated in some way. Regulators and market participants believed that the credit rating agencies need to abide by standards of corporate governance and supervision due to their pivotal role in the US subprime crisis. This belief was amplified recently because the rating agencies were deeply involved in the European debt crisis after various sovereign debt ratings were significantly downgraded. Therefore, the paper highlights the critique against the agencies’ role in the two most recent crises and reviews the regulation proposals which subject the rating agencies to behavioral standards.

Suggested Citation

  • Mai Hassan & Christian Kalhoefer, 2011. "Regulation of Credit Rating Agencies - Evidence from Recent Crisis," Working Papers 26, The German University in Cairo, Faculty of Management Technology.
    • Handle: RePEc:guc:wpaper:26
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    File URL: http://mgt.guc.edu.eg/wpapers/026hassan_kalhoefer2011.pdf
    File Function: First version, 2011
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    More about this item

    Keywords

    Credit rating agencies; subprime; Euro crisis;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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