Emergence of rating agencies: Implications for establishing a regional rating agency in Asia

Arbeitspapier

The present analysis sheds light on the setting up a regional rating agency in Asia in the wake of recent financial crisis. We investigate the policy facing a financial regulator while evaluating whether or not to admit new entrants into the credit rating market. In an incomplete contracting framework, we show that an impartial financial regulatory body (represented by a benevolent supranational organization) can facilitate credit ratings of high quality by allowing for the entry of new rating agencies on a non-single basis than it does for a mere single entry. This finding is caused by increased competition among the rating agencies, which induces higher quality of rating services even should rating agencies still exert below their maximum level of efforts.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADBI Working Paper ; No. 241

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Asymmetric and Private Information; Mechanism Design ; Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies ; Information and Product Quality; Standardization and Compatibility
• Subject: Ratingagentur ; Internationale Organisation ; Kapitalmarktliberalisierung ; Regulierung ; Entscheidung bei Risiko ; Unvollkommener Markt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Tsai, Ying Yi ; Liu, Li-gang
• Event: Veröffentlichung
• (who): Asian Development Bank Institute (ADBI)
• (where): Tokyo
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/53646
• Last update: 10.03.2025, 11:44 AM CET