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Did Credit Rating Agencies do good work (with impact on the Qatari Context) - Term Paper Example

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Did Credit Rating Agencies do good work (with impact on the Qatari Context)

The research will analyze the roles and benefit of CRAs in the last financial crisis of 2007 – 2009. The research will provide evidence of the financial crisis on the credibility and accountability of credit rating agencies. The credit crunch will be explained and also the contribution of credit rating agencies to the financial crisis. The benefit of credit rating agencies to investors is also discussed in the paper. The research methodology and design and reporting and analysis will be dealt with by the research paper. The role of credit rating agencies during and before the financial crisis will also be discussed in the paper. The implication of the financial crisis in the economy of Qatar will be discussed a bit to establish the impact of it is on the people. Contents Abstract 1 Contents 2 Introduction-What Is Credit Rating? 3 Research Objectives 4 Literature Review 4 Role of Credit Rating Agencies During and Before Financial Crisis 6 Credit Ratings Assignment Process 7 Research Methodology and Design 8 Reporting and Presentation of the Project 9 Credit Rating Agencies as Coercive Regulators 10 How CRAs Impact On Financial Market Participants 10 Relation between Credit Rating and Agency Problem 11 Implications of Financial Crisis on Qatar’s Economy 12 Conclusion 12 References 13 Introduction-What Is Credit Rating? Crediting rating is a common statement that refers to opinion concerning a debt instrument and its issuer company. It gives an investor a clear indication on whether the debt instrument is safe or risky. It also tells the investor the capability of the issuer company to pay interest and the principal amount in time. However, credit rating is simply an opinion rather than a recommendation and thus does not require an investor to buy or sell an instrument. Currently, global rating is undertaken by several credit rating agencies with the general ones are Standard and Poor’s (S&P), Moody’s Corporation both of whom are based in the USA and Fitch Rating Firm. The above named rating agencies hold the majority of the credit rating share. However, there are more than 100 minor credit rating agencies in the market offering quality credit rating in national markets and industries (Benmelech 2009). Credit rating is usually done by experts who examine various factors and provide the rating is expressed in either alphabetical or alphanumeric symbols. AAA is the highest possible rating as per the S&P agency. High quality credit investment grades are grades AAA and AA whereas grades A and BBB offer medium credit quality investment grades. However, grades BB, B, CCC, CC and, C means that the issuer has a low credit quality and maybe there is no existence of investment credit quality. Grade D is the lowest possible credit rating, and this means that there is no way that the creditor will recover his interest plus the principal amount. According to this credit rating, those companies with AAA, AA, A and, BBB grades presents less risk and thus most investors will be attracted to invest in them since they have assurance that there will be a gain in their market share. Credit Rating Agencies (CRAs) plays a bigger role in today’s financial markets in Qatar. The rating is normally followed closely by the investors, issuers, borrowers and government’s financial institutions. Research Objectiv ...Show more

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Did Credit Rating Agencies Do Good Work Institution Date Abstract The agencies bear the greatest responsibility of the financial crisis that last from 2007 to 2009 and the policy makers, agencies itself and the market participants acknowledge the CRAs…
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Did Credit Rating Agencies do good work (with impact on the Qatari Context) essay example
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