Review article

The Financial Crisis and States' Credit Ratings

Sanja Bach orcid.org/0000-0002-5484-6402 ; Ministarstvo financija RH

Abstract

During the global financial crisis, the end of which cannot yet be anticipated, the focus of attention has been, not for the first time, on rating agencies. More precisely, the reduction in country ratings gives cause for concern over the credit-worthiness of countries, but there is also the question of the way in which these rating agencies measure the ratings. The key concern refers to the instability brought to financial markets through reduction in ratings, especially when the reduction in ratings falls under non-investment categories. The complexity of financial markets and the variety of debtors have increased over time, investors and regulators rely more and more on the opinions of rating agencies. At the same time, the number of credit rating agencies that operate in the USA and other countries has risen significantly. All of this, and especially the current financial crisis, has lead market participants and policymakers to question the functioning of the agencies, as well as the adequacy of the public supervision over the rating industry. The same thing happened during the Asian financial crisis, which raises the issue of rating agencies’ power and their influence on financial markets in the future.

Keywords

credit ratings; credit rating agencies; financial crisis; supervision; regulation

Hrčak ID:

143344

URI

https://hrcak.srce.hr/143344

Publication date:

6.12.2014.

Article data in other languages: croatian

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