Ratings performance, regulation and the Great Depression: lessons from foreign government securities

During the 1930s, rating agencies took up a central role in regulatory supervision that they still have today. We study the process through which they received this regulatory license. The proximate cause for this changeover was the economic shock of the Great Depression. Exploring the performance of rating agencies in assessing the risks of sovereign debt, an important segment of the bond market, we show that superior forecasting capacities cannot explain the agencies’ growing importance. We argue that the agencies’ perceived lack of conflicts of interest (in contrast to other financial intermediaries) was a major factor in bringing them to the forefront of a new regulatory regime.


Publication infos:
Geneva, The Graduate Institute of International and Development Studies, 2009
Publication year:
2009
Number of pages:
65 p.
Collection:
Working papers in international history and politics ; 3



 Record created 2011-08-05, last modified 2019-08-05

Access to files:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)