Ratings shopping and asset complexity: A theory of ratings inflation
نویسندگان
چکیده
منابع مشابه
Ratings Shopping and Asset Complexity: A Theory of Ratings Inflation
Many blame the recent financial market turmoil on ratings agencies. We develop an equilibrium model of the market for ratings and use it to examine popular arguments about the origins of and cures for ratings inflation. In the model, asset issuers can shop for ratings – observe multiple ratings and disclose only the most favorable – before auctioning their assets. When assets are simple, agenci...
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Many blame the recent financial market turmoil on malfeasance of ratings agencies, who had incentives to bias their ratings. But these incentives had existed for decades. Why did the ratings bias issue only recently emerge? We model asset issuers who can cherry-pick ratings – observe multiple ratings and disclose only a subset – before auctioning their assets. When assets are simple, agencies’ ...
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Many blame the recent financial market turmoil on malfeasance of ratings agencies, who had incentives to bias their ratings. But these incentives had existed for decades. Why did the ratings bias issue only recently emerge? We model asset issuers who can shop for ratings – observe multiple ratings and disclose only a subset – before auctioning their assets. When assets are simple, agencies’ rat...
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Most market observers attribute the recent credit crunch to a confluence of factors: excess leverage, opacity, improperly estimated correlation between bundled assets, lax screening by mortgage originators, and market-distorting regulations. It was the job of the credit rating agencies to create transparency, to provide the basis for risk-management regulation, and to discipline mortgage lender...
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Niam Yaraghi is a Fellow in the Brookings Institution’s Center for Technology Innovation. He is an expert on the economics of health information technologies. Nearly two million Americans spend an average of 835 days of their lives in one of the 15,700 nursing home facilities in the United States (National Center for Health Statistics 2009). The Department of Health and Human Services estimates...
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ژورنال
عنوان ژورنال: Journal of Monetary Economics
سال: 2009
ISSN: 0304-3932
DOI: 10.1016/j.jmoneco.2009.04.006