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Sl.no Title

1 PRESENT AND FUTURE POSITION OF CREDIT RATING

2 Tiebreaker: Certification and M!ti"!e Credit Ratin#$

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Authors Journal Name & Issue No

 Pro% Danta D&ia'#o(Nico!a$ Co"ernic$ Uni)er$it*Fac!t* o% Econo+ic Science$ and Mana#e+entDe"art+ent o% Accontin# Ga#arina 1,a( -./100 Tor( Po!and

Folia Oeconomica Stetinensia. 2012,Issue 2, p160-174. 15p. 1 Chart.

DION ONGAERTS( 34 54 MARTI5N CREMERS( and

6I77IAM N4 GOET8MANN

 T9E 5OURNA7 OF FINANCEO74

7;II( NO4 1FERUAR< 2012

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Objective

The article ra!s attention to the importance o" creit ratin# in the "inancial mar$et. Itanal%ses the possi&le scenarios "or creit ratin# importance in the "uture conte't o" the"inancial mar$et. It iscusses the "uture architecture o" the "inancial mar$et an the sa"et%s%stem in #eneral

 T=e "a"er di$c$$e$ t=e econo+ic ro!e t=e credit a#encie$ "!a*in t=e cor"orate bond +arket4 In t=i$ "a"er bond i$$e creditratin#$( c=aracteri$tic$( and +arket "rice$ =a)e been $ed toe+"irica!!* e)a!ate t=e +!ti"!e ratin#$ t=eorie$4 Mar#ina!(additiona! credit ratin#$ are +ore !ike!* to occr beca$e o%( and$ee+ to +atter "ri+ari!* %or( re#!ator* "r"o$e$4 In t=i$ "a"ert=ree =*"ot=e$e$:/>in%or+ation "rodction( >'=ic= "o$it$ t=att=e t=ird rater add$ )a!e/re!e)ant in%or+ation( ?ii@ >ratin#

$=o""in# '=ic= "ro"o$e$ t=at i$$er$ $=o" %or a better ratin#conditiona! on recei)in# a di$a""ointin# one( and ?iii@ >re#!ator*certification( '=ic= conBectre$ t=at a t=ird a#enc* "!a*$ t=ero!e o% tie breaker at t=e bondar* o% bein# c!a$$ified a$ IG?in)e$t+ent #rade@ )er$$ 9< ?=i#= *ie!d@4 T=e* do not $ee+ to"ro)ide $i#nificant additiona! in%or+ation re!ated to credita!it*4

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Sampling Method Data sed

a!itati)e Pa"er

CRA "er%or+ance 'it= re$"ect tode%a!t "rediction on a 1/*ear =ori&on=a)e been $ed "ri+ari!* %or t=e

bond$ t=at =a)e been rated b* t=e ,ratin# a#encie$ SAP(Mood*$ andFitc=

Credit Ratin# data o% US ond$

%ro+ 2000 to 200-

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Statistical Tools sed !ariables used

Co+"ari$on and Indction Met=od$ =a)e been$ed

Re#re$$ion Ana!*$i$ =a$ been a""!ied ratin#$ca!e$(ratin# $ca!e d++ie$(and ratin#dierence$ %or t=e co+"!ete ni)er$e o% bond$t=at are rated b* a!! t=ree CRA$49*"ot=e$i$

t=eor* a""!ied %or te$tin# t=e te$tin# in%or+ation"rodction(ratin# $=o""in# and re#!ator*certification

Credit ratin#$ #i)en t=e

CRA$

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"indings

14@Si#nificant dierence$ eHi$t acro$$+!ti"!e credit ratin#$ o% t=e $a+e bondi$$e at t=e $a+e "oint in ti+e

24@ond "rice data re)ea! =o' t=e +arketre#ard$ a ratin# b* t=e t=ird a#enc*,4@ CRA$ "ro)ide $e%! in%or+ation to t=e+arket abot credit ri$k4 9o'e)er( norob$t e)idence t=at Fitc= ratin#$ "ro)ideadditiona! in%or+ation incor"orated inbond "rice$( re!ati)e to t=e in%or+ationa!read* contained in Mood*$ and SPratin#$

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#onclusions

 T=e ba$ic condition %or credit ratin# eHi$tence i$ in)e$tor$ tr$t46it=ot t=e tr$t o% t=e in)e$tor$( t=ere 'i!! not be t=e eHi$tence o%CRA$4 A!$o( ina""ro"riate ratin# 'i!! !ead to +arket $=are !o$$ %or t=ea#encie$4 In)e$tor$ $e t=e credit ratin# o'in# to t=e $e)era!

rea$on$ !ike:/ !ack o% a!ternati)e$ %or +ea$rin# creditabi!it* o%$bBect$ and financia! in$tr+ent$ on $c= a 'ide $co"e( !a're#!ation$ creatin# de+and %or credit ratin#$( in)e$tor$ #ettin#acc$to+ed to %ree #rade$ a$ 'e!! a$ to %ree financia! aditor$tate+ent$4 9o'e)er( credit ratin# i$ not a "er%ect too! and t=ecirc+$tance$ in '=ic= it eHi$t$ are not "er%ect4 In)e$tor$ =a)e totake into con$ideration t=e +icroecono+ic and +acroecono+ic)ariab!e$4 T=ere%ore( credit ratin# i$ a too! to redce in)e$t+ent ri$k(and at t=e $a+e ti+e it #enerate$ additiona! ri$k "artic!ar!* i% t=e$*$te+ '=ic= i$ no' %nctionin# i$ $""o$ed to be di$+ant!ed or$i#nificant!* c=an#ed 4

 T=e +entioned findin#$ in addition to t=e ot=er re$!t$( %or eHa+"!e(on t=e !iidit* o% t=e bond$( !ead$ to conc!$ion t=at t=ird?or+!ti"!e@ CRA ari$e in ei!ibri+ a$ a tiebreaker t=at re$o!)e$ a no/

trade re#ion in a $ettin# 'it= in%or+ation/$en$iti)e and in$en$iti)ein)e$tor$ and a$$et$4

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Done $% roup Member name

Sdar$=an 3+ar De*

Sdar$=an 3+ar De*

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