192 2a n0 d1 3c a; tHeer ientgabl .e, h2 a0v1i6o ;r Zmhioguh te ct aaul .s, e2 0o v1e7r; vFal lyunend ar na tdi nGghse(natl ,s 2o 0r 1e f8e)r. rReadt ti no ga ss hi no pf l pa ti ne dg ratings) that do not represent the actual underlying credit risk of a tranche. Inflated ratings as a result of competition in the credit rating market is found to be even more pronounced for CRAs which are relatively new to the credit rating market, such as DBRS and KBRA. New CRAs seem to offer more optimistic ratings as a competitive strategy against their incumbent, well-established peers, as argued Flynn and Ghent (2018). They find that new entrees assign credit ratings that are several notches higher than those of the incumbent, larger CRAs. Similarly, Bae et al. (2019) and Becker and Milbourn (2011) find that new CRAs tt ehna dt tthoepnr oe vwi edre CmRoArse’ ocpr et idmi ti srtai ct i nc rgesdai tr er altei snsg si ncfoomr mpaatrievde . t oI nt hl ien el a wr giet hr ot hn iess, aVna nd Bc rreeaetme secnreedt iat lr. a(t2i n0g2 3i n)csohnoswi s tet hnacti ecsoimn pt heet iRt iMo nB Sb emt wa rekeent . l a rg e a n d n e we r C R A s 5.3 Hypotheses Examined Our assessment of the literature on creditor rights and RMBS transactions led us to create three hypotheses regarding the credit ratings and structure of RMBS ti sr atnhsaat c ct iroe nd si t. oWr er i gf ohctus sf oorn mt hoer t Ug aSg Re sMvBaSr ymaacrrkoests sUp Se csi tf ai ct ae lsl y(. GThheen ts, t a2r0t 1i n4g; Gp ou i ne tt awl .h o2 0i n1 v8e) s, tt hi nu sR Mi n Bd iSr et rcat lnyc hp er os vwi di ti hn gmdoi rf ftegraegnet l ol eavnesl si no ft hpersoet es ct at itoens . fFoirr sitn, vwe es t ao rr es ibnyt edr ei fsf et er de n itf Ct hReA sd iifnf e rt ehne c ec sr e idni t c rr ae tdi int go r f or ri g hRtMs BaSr e t rcaonncshi setse. nPt lrye vi inocuosr psot ur adtieeds (e.g., Mansi et al., 2009) show that credit ratings of bonds of firms that are ionnceo rmpiogrhatt ee dx pienc ts tt ahtaets CwR iAt hs (m1 )o rc eo nrseisdter ri c tt hi vee l epvaeyloouft csrteadt iut eosr pa rr eo t he ci gt hi oenr. i nH et hn ec ei r, md oe tshoo cdoonl os gi syt et on tdl ye. t He romwi enveetrh, eo uc rr erdeivt ireawt i nogf ftohre RUMS BRSMt rBaSn cr ha et isn ag nmd e( t2h) otdhoa ltotghi ee ys
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