ABSTRACT

Credit rating agencies (CRAs) have emerged as a core financial institution in neoliberal capitalism. This chapter outlines the history and current landscape of the credit ratings market; and provides some detailed commentary over selected stylized facts of the big-three CRAs. Main focus is on the corporate ownership, office location, and revenues. The moral hazard critique is not only the most common issue raised against the CRAs, but also a critique broadly adopted across social sciences, endorsed even by mainstream economics. The chapter describes the main aspects of credit rating methodology, discusses the macroeconomic effects of sovereign ratings in detail and presents the geographical distribution of these ratings around the globe. A particularly interesting aspect pointed out in Gibson et al. is the occurrence of doom-loops between sovereign credit ratings, sovereign interest rates, and bank ratings. The authors provide a brief elaboration of the contemporary geographical distribution of Moody’s sovereign ratings.