Credit ratings failures : causes and policy options
- Credit ratings failures : causes and policy options
- Pagano, Marco
- Italian Academy
- Persistent URL:
- Italian Academy Fellows' Seminar Working Papers
- February 2009.
- Italian Academy for Advanced Studies in America, Columbia University
- Publisher Location:
- New York
- This paper examines the role of credit rating agencies in the subprime crisis, which was at the outset of the ongoing financial turmoil. The focus of the paper is on two aspects that contributed to the boom and bust of the market for asset-backed securities: rating inflation and coarse information disclosure. The paper discusses how regulation can be designed to mitigate these problems in the future. The suggestion is that regulators should require rating agencies to be paid by investors rather than by issuers (or at least constrain the way they are paid by issuers) and force greater disclosure of information about the underlying pool of securities.
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- Suggested Citation:
- Marco Pagano, Paolo Volpin, 2009, Credit ratings failures : causes and policy options, Columbia University Academic Commons, https://doi.org/10.7916/D8251QH5.