135 st rma na cl lhCe R. HAesntcoe p, hr iogvhi edre obr el totwe re rr amt ianrgkse tt hs ha anrtehoef laa lragreg eCrRcAo, mo pn eatvi teorramg ei g, fhot rntehgea tsiavme l ye ai ff cf eocmt tpheet irt ai ot innhg aqsuaanl i ti my opfascmt oanl l tChReArsa.t Wi n ge dc oi fnf esrter un cc te st hbeeftowl leoewn i Cn Rg Ahsy:p o t h e s i s t o t e s t H1A. With higher competitive pressure from large CRAs, small CRAs tend to report more favorable ratings than large CRAs for the same tranche. We then turn to the question of how more competition (market share) from small Ci nRt eArse satf ffeocrt t ht heeRrMa tBi nS gmoa fr kl ae rt g, we rh eCrReAt sh. eTshmi sa lilse raCqRuAess rt ieocne nt thl ya tg ai si nsepde sc ii gf inc ai flilcya no tf market share. This gives us our next hypothesis: H1B. With higher competitive pressure from small CRAs, large CRAs tend to report more favorable ratings than small CRAs for the same tranche. El oxot seennd itnhge itrh ri sa thi nygp osttha ensdias r, dosn et o ma i gghr et aet xe pr eecxtt et nh at tt hsamna ll la r(gl ae r g( sem) aClRl )ACs RtAe sn da nt do at rsasni gcnh eb er tetceer i vr ae tdi nagnsot tohreert ac irne do irt graaitni nmg )a. r Tk ehti ss hl ea ar ed s( i tror eos up re cnt ei vxet l yt wo of wh hy ep toht ehre tshe es tcoomtepsettiitfioCnR: As loosen or tighten their credit rating standards with higher H2A: Small CRAs are more likely to loosen their rating standards when the competitive pressure from large CRAs is higher. H2B: Large CRAs are more likely to loosen their rating standards when the competitive pressure from small CRAs is higher. The issuer-pays revenue model of CRAs creates high bargaining power for Chapter 4 - Intensified Competition and the Impact on Credit Ratings
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