The Credit Rating Agencies, Their Role in the Financial Crisis and What Is Next?
End of Studies Thesis
What is the role of the credit rating agencies, which part did they play in the recent Financial Crisis and how can their efficiency be improved?
Thesis Supervisor – David Menival
Emmeline Beauchamp – Cycle Franco- US – March 2013
Acknowledgments I would first like to thank RMS and especially the CESEM to have taught me a lot, helped me to grow and open up and gave me this incredible opportunity of studying two years in the United States. None of this phenomenal experience would have been possible without them. I would also like to thank Northeastern University for allowing me to discover a new culture and a different educating system. It also had a tremendous role in my future accomplishment and professional career. In addition, I would like to thank all the professors I had during these four years of studying, whether it is at CESEM or at Northeastern University. They made this journey even more profitable and enjoyable. I would also like to thank David Menival, my thesis supervisor, who accepted to work with me on this project. Finally, I would like to thank my parents for always supporting my choices and being next to me when I needed them. They have been my guides and models in life and have always encouraged me to be better and push myself.
Table of Content
Introduction4
I. Credit Rating Agencies: Role and methods5
1) History5
2) Role and methods7
3) The Issuer-Payer model 9
II. The Credit Rating Agencies and the Financial Crisis: is the thermometer responsible for the fever?12
1) Background of the financial Crisis12
2) Credit Rating Agency are not fully responsible… 14
3) …But they could have done better17
III. What is next?20
1) Lessons learned from the crisis 20
2) Regularization of the existing Credit Rating system 21
3) A new rating system23
4) Creation of new Credit Rating Agency24
Conclusion26
Exhibits27
Bibliography32
Introduction
A credit rating agency is
What is the role of the credit rating agencies, which part did they play in the recent Financial Crisis and how can their efficiency be improved?
Thesis Supervisor – David Menival
Emmeline Beauchamp – Cycle Franco- US – March 2013
Acknowledgments I would first like to thank RMS and especially the CESEM to have taught me a lot, helped me to grow and open up and gave me this incredible opportunity of studying two years in the United States. None of this phenomenal experience would have been possible without them. I would also like to thank Northeastern University for allowing me to discover a new culture and a different educating system. It also had a tremendous role in my future accomplishment and professional career. In addition, I would like to thank all the professors I had during these four years of studying, whether it is at CESEM or at Northeastern University. They made this journey even more profitable and enjoyable. I would also like to thank David Menival, my thesis supervisor, who accepted to work with me on this project. Finally, I would like to thank my parents for always supporting my choices and being next to me when I needed them. They have been my guides and models in life and have always encouraged me to be better and push myself.
Table of Content
Introduction4
I. Credit Rating Agencies: Role and methods5
1) History5
2) Role and methods7
3) The Issuer-Payer model 9
II. The Credit Rating Agencies and the Financial Crisis: is the thermometer responsible for the fever?12
1) Background of the financial Crisis12
2) Credit Rating Agency are not fully responsible… 14
3) …But they could have done better17
III. What is next?20
1) Lessons learned from the crisis 20
2) Regularization of the existing Credit Rating system 21
3) A new rating system23
4) Creation of new Credit Rating Agency24
Conclusion26
Exhibits27
Bibliography32
Introduction
A credit rating agency is