Regulation, Market Structure, and Role of the Credit Rating Agencies

摘要: In this paper, we argue that the financial markets would have been better served had credit rating agency industry more competitive. We will show Securities and Exchange Commission’s (SEC) designation of Nationally Recognized Statistical Rating Organizations (NRSROs) inadvertently created a de facto oligopoly primarily propping up three firms: Moody’s, S&P, Fitch. also explain rationale behind NRSRO given to CRAs demonstrate it was not intended serve as an oligopolistic mechanism, but rather mechanism protect consumers. Although were indirectly constrained by their reputational value among investors, lack competition in marketplace likely allowed for greater complacency ratings’ methodologies. contend government regulatory use ratings inflated market demand CRA despite decreasing informational ratings.