130 Hd ooews envoetr,a tshs ieg nr ebseutlttes r arraet i no gp sp of osri tteh eo fs awmhea tt rwa nec hweowu lhde ne xcpoemc tp. eItni t igoenn oe rf aMl , oDo Bd yR’ Ss intensifies. On the contrary, our results show that in these cases Moody’s reports tDhBeRbS eht taesra rhaitgi nh ge rs , mnaortk De tBsRhSa. r eW, iht ei sn Dt hB eR Ss iwt uhaot ieonnd si s utph ien ot ht he edr e wa l apyr oavr iodui nn dg , t hs oe better rating and Moody’s the worse one for the same tranche. In our second set of tests, we investigate whether higher market share of large (small) CRAs has led the smaller (larger) CRAs to adjust their rating standards. We find that they do, and provide evidence that when competitive pressure is higher, both large and small CRAs tend to adjust their rating standards. In our third, and final, set of tests we examine whether small CRAs tend to provide better ratings, on average, when dealing with a more powerful issuer. We find that they do. Particularly KBRA tends to report better ratings when dealing with larger, more powerful, issuers. Our study contributes to a growing body of literature on competition (Bolton et ae l. g. , . ,2A0 l1p2, ;2Z0h1o3u; Ce at faalr. ,e2l l0i , 1270; 2B0a)gihna ti haen dc r Be de ictkreart, i2n0g2m0 )a raknedt . rTa ht i en gwsotraknsdcalrodsse s( ts ei ne sOpui rr i tp at op eoru cr opnatpr iebruat er es tt ho otshee olfi tFe lryant un r ae nbdy Gahneanl yt z(i2n0g1a8 )u anni qduBe ame aert kaelt. (s2e 0t t1i n9g) ,. namely one in which small CRAs have gained significant prominence in the RMBS ma nadr kr ee gt uolvaet iro tnhset hpaats th ayve ea rsst .i mWuel aatreed tchoemr epf eo triet i oa bn l ien ttoh ea scsreesdsi twr ah tei tnhge mr tahr ek ertual er es af i lrssot bt oe nt ee sf itc ii af ls imn apl rl aCcRt iAc es faor re tmh eo rqeu as el i nt ys iot ifvrea tt ion gi sss. uAedr ds ’i tpi oonwael lry ,t ho ua nr pl aarpgeer Ci sRtAhse, bb ue ti wl d ei ne gn ut hp eo np ot hweewr oorf ki sbsyu eHres .eOt aulr. (r2e 0s u1l2t s) wa rheor sehl eovwa nt ht at ot ipnovlei cs tyomr sa kdei frfse rseene tki iant ge to improve the effectiveness and efficiency of their legislative frameworks for fostering competition in the market for credit ratings.
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