Please use this identifier to cite or link to this item:
Title: The impact of credit rating agencies and the newly imposed regulations
Authors: Agius Millo, Malcolm
Keywords: Rating agencies (Finance)
Financial crises
Issue Date: 2015
Abstract: This study is intended to identify the impact of the Credit Rating Agencies in the Financial Crisis, and whether they are playing a credible role in the Eurozone Financial market. The Financial crisis adds weight on the uncertainty regarding the creditability of CRAs as they had mistakenly underestimated the credit risk, along with other risks, of many securities; thus nearly collapsing the global financial market. This study proceeds to study the implications of the newly imposed regulation on the CRAs, whether positive or negative, on the financial market as a whole. This study will also assess whether the downfalls of the CRAs, witnessed in the financial crisis, have been properly addressed and how this new regulation has helped to prevent the likelihood of future crises. This research will be a retrospective analysis of information gathered about the impact of CRAs on the financial markets so that a prospective conclusion can be made about the regulation of such CRAs. Data will be gathered through different mediums such as academic and commercial abstracts, bibliographic databases and Internet search engines, in addition to interview with professional individuals. The EC had released an impact statement containing a proposal on the 11th of November 2011 that would, at the least, prevent CRAs to provide ratings on sovereign debt. With the new framework investors can take legal action against CRAs “if they infringe intentionally or with gross negligence”. In addition to this, they would have to disclose all information regarding their rating methodologies. As of 20 June 2013, CRAs started following stricter rules which will make them more accountable for their actions. The new rules also aim to reduce over-reliance on credit ratings while at the same time improving the quality of the rating process. CRAs will have to be more transparent when rating sovereign states. This is a valid research study mainly due to the fact that CRAs are an essential component in the financial system (mainly capital markets and credit derivatives market). One small error from their part will most likely affect the whole financial system, i.e. suppliers and buyers of credit, and the whole performance of the markets. Thus, finding the right types of regulation is essential.
Description: B.COM.(HONS)BANK.&FIN.
Appears in Collections:Dissertations - FacEma - 2015
Dissertations - FacEMABF - 2015

Files in This Item:
File Description SizeFormat 
  Restricted Access
852.51 kBAdobe PDFView/Open Request a copy

Items in OAR@UM are protected by copyright, with all rights reserved, unless otherwise indicated.