Rating agencies: Role and influence of their sovereign credit risk assessment in the Eurozone

S.C.W. Eijffinger

Research output: Contribution to journalArticleScientificpeer-review

27 Citations (Scopus)

Abstract

In this article, the role of credit rating agencies (CRAs) during the 2010–11 EU sovereign debt crisis is assessed. It is concluded that rating agencies lag behind markets, that their business model is flawed, and that the lack of competition renders the big three CRAs with too strong a market position. The reliance on CRAs should be reduced by attaching less importance to them in prudential regulation and accounting standards. At the same time, more competition and transparency is needed to increase the quality of ratings. Finally, several policy options to change the ratings industry are discussed, including the creation of a network of small CRAs, delegation of sovereign debt ratings to the European Central Bank or the creation of a European rating agency.
Original languageEnglish
Pages (from-to)912-921
JournalJournal of Common Market Studies
Volume50
Issue number6
DOIs
Publication statusPublished - Nov 2012

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