Regulatory reliance to blame for faulty credit ratings, paper claims

Fitch Ratings

Increased regulatory reliance on credit ratings and the growing importance of risk-weighted capital in prudential regulation are more likely to have contributed to distorted ratings than the relationship between the rater and the rated, according to a new paper by two US academics, published yesterday by the Bank of Korea.

In their paper: Rating Agencies, Harold Cole of the University of Pennsylvania and Thomas Cooley of New York University analyse the "common narrative" that "the value of

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