Sovereign Debt and Rating Agency Bias

Sovereign Debt and Credit Rating Bias rejects the notion that credit rating agencies' rigorous and transparent determination of ratings leaves no room for bias, and debunks the myth that the value CRAs place on their reputational capital precludes prolonged biases. To determine the extent of CRAs' biased actions, Tennant and Tracey apply a rigorous methodology to a well-established economic model of the determinants of sovereign debt quality. They present strong evidence of bias against poor countries and demonstrate how biased rating changes could disadvantage such countries and the companies operating therein as they seek access to international capital markets. They discuss plausible explanations for the bias and suggest remedial measures that would help ensure balance in credit rating changes. This book fills an important gap by rigorously examining a long-standing but often ignored concern about the rating practices of credit rating agencies.

Autorentext
David F. Tennant is Professor of Development Finance in the Department of Economics and Associate Dean in the Faculty of Social Sciences at the University of the West Indies, Jamaica. He was previously Economist in the Financial Regulations Division of the Jamaican Ministry of Finance and Planning.

Marlon R. Tracey is a doctoral student in his final year of studying labor economics and applied econometrics in the Department of Economics at Binghamton University, State University of New York, USA. He was previously Lecturer of Statistics and Statistics Coordinator in the Department of Economics at the University of the West Indies, Jamaica.

Inhalt

1. Credit Rating Agencies as Gatekeepers
   
   2. Establishing the Determinants of Sovereign Debt Ratings: Is There Really Room for Bias?
   3. Resilience in Spite of Controversy: Conditions for Bias in the Credit Rating Industry
   4. Trends in Sovereign Debt Ratings: Are There Any Preliminary Signs of Bias?
   5. Introducing Greater Rigor: Methodological Approach
   6. Are Poorer Countries Disadvantaged by the CRAs? Empirically Establishing a Bias
   7. Now That We Have Found Bias, What Are We Going To Do With It?