Research finds East Asian ratings discrepancy

A significant discrepancy exists between agency ratings and market-based default risk measures for East Asian banks, according to a paper published by the Hong Kong Monetary Authority on Tuesday.

The paper, "Ratings versus market-based measures of default risk of East Asian banks", which looks at data from between 1996 and 2006, shows that credit ratings adjusted slowly following the start of the 1997 financial crisis in the region.

The paper said that the discrepancy could result in

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