Original scientific paper
https://doi.org/10.2478/bsrj-2021-0027
Market Structure Development in a Regulated Market: The Case of the EU Rating Agencies
Gunther Meeh-Bunse
orcid.org/0000-0002-8546-2823
; University of Applied Science Osnabrueck, Germany
Stefan Schomaker
; University of Applied Science Osnabrueck, Germany
Abstract
Background: The motivation for this article is the observation of political and private efforts to establish an EU-based rating agency as a counterweight to the three major agencies and observe other approaches to increase competition in the rating mar-ket. Objectives: This article aims to analyse the potential regulatory impact of the oli-gopolistic situation on the European Union (EU) rating market in the regulation im-posed on the agencies. Methods/Approach: Selected key figures are applied to ob-serve if and how the dominance has changed. The different rating service range of-fered by the registered rating agencies in the EU is also considered in the analysis. Re-sults: The research results show that new agencies potentially impact the EU rating market. While the three major rating agencies still dominate the market, they do so within a changing environment. Conclusions: The employment of external ratings is significant in the financial sector. Ratings provide relevant information on the default risk of financial instruments and assess the solvency of issuers. The market for external ratings thereby can be classified as oligopolistic. Turbulences during the financial crisis of 2008 triggered stricter regulation of the credit rating agencies. Such regulation has now been in force for a good decade.
Keywords
Credit rating agencies (CRAs); ratings; regulation; EU-Regulation; sustainability ratings; corporate finance; capital markets
Hrčak ID:
273007
URI
Publication date:
1.12.2021.
Visits: 677 *