Rating the credit rating agencies

Dror Parnes, Sagi Akron

Research output: Contribution to journalArticlepeer-review


We offer herein several policy tools that can assist the new Office of Credit Ratings within the Securities and Exchange Commission in assessing the quality of past credit ratings and thus measuring the inclusive competency of credit rating agencies. We propose to weigh the degrees of accuracy, consistency and total synchronization between a tested sample of past ratings and a benchmark array of flawless ratings. We also discuss various techniques to handle major discrepancies between these two arrays of credit ratings. We further explain and demonstrate the importance of different sample sizes. In addition, we present a simple approach to estimate the probability of convergence between the two matched sets of ratings under specified governing thresholds. Lastly, we illustrate the bulk of the theory with a concise empirical investigation.

Original languageEnglish
Pages (from-to)4799-4812
Number of pages14
JournalApplied Economics
Issue number50
StatePublished - 26 Oct 2016

Bibliographical note

Publisher Copyright:
© 2016 Informa UK Limited, trading as Taylor & Francis Group.


  • Cartesian coordinate system
  • Dodd–Frank Act
  • flawless benchmark index
  • identity line
  • level of synchronization
  • office of credit ratings

ASJC Scopus subject areas

  • Economics and Econometrics


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