1. bookVolume 12 (2021): Issue 2 (December 2021)
Journal Details
License
Format
Journal
eISSN
1847-9375
First Published
19 Sep 2012
Publication timeframe
2 times per year
Languages
English
access type Open Access

Market Structure Development in a Regulated Market: The Case of the EU Rating Agencies

Published Online: 10 Apr 2022
Volume & Issue: Volume 12 (2021) - Issue 2 (December 2021)
Page range: 187 - 199
Received: 25 Jan 2021
Accepted: 11 Jul 2021
Journal Details
License
Format
Journal
eISSN
1847-9375
First Published
19 Sep 2012
Publication timeframe
2 times per year
Languages
English
Abstract

Background: The motivation for this article is the observation of political and private efforts to establish an EU-based rating agency as a counterweight to the three major agencies and observe other approaches to increase competition in the rating market.

Objectives: This article aims to analyse the potential regulatory impact of the oligopo-listic situation on the European Union (EU) rating market in the regulation imposed on the agencies.

Methods/Approach: Selected key figures are applied to observe if and how the dominance has changed. The different rating service range offered by the registered rating agencies in the EU is also considered in the analysis.

Results: The re-search results show that new agencies potentially impact the EU rating market. While the three major rating agencies still dominate the market, they do so within a chang-ing environment.

Conclusions: The employment of external ratings is significant in the financial sector. Ratings provide relevant information on the default risk of financial instruments and assess the solvency of issuers. The market for external ratings thereby can be classified as oligopolistic. Turbulences during the financial crisis of 2008 trig-gered stricter regulation of the credit rating agencies. Such regulation has now been in force for a good decade.

Keywords

JEL Classification

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