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How did increased competition affect credit ratings? / Bo Becker, Todd Milbourn.
- Format:
- Book
- Author/Creator:
- Becker, Bo.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w16404.
- NBER working paper series no. w16404
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2010.
- Summary:
- The credit rating industry has historically been dominated by just two agencies, Moody's and S&P, leading to longstanding legislative and regulatory calls for increased competition. The material entry of a third rating agency (Fitch) to the competitive landscape offers a unique experiment to empirically examine how in fact increased competition affects the credit ratings market. Increased competition from Fitch coincides with lower quality ratings from the incumbents: rating levels went up, the correlation between ratings and market-implied yields fell, and the ability of ratings to predict default deteriorated. We offer several possible explanations for these findings that are linked to existing theories.
- Notes:
- Print version record
- September 2010.
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