Fair or not? How credit rating agencies calculated their ratings during the Eurozone crisis

Credit rating agencies received a great deal of criticism during the Eurozone crisis, but what actually explains the changes that occur in a country’s credit rating? Drawing on new research, Periklis Boumparis, Costas Milas and Theodore Panagiotidis write that ratings agencies have responded differently to low-rated and high-rated Eurozone countries.

Regulatory quality and competitiveness have a stronger impact for low rated countries, while GDP per capita is a major driver for high rated countries. The creditworthiness of low rated countries also takes a much bigger ‘hit’ than that of high rated countries when European policy uncertainty is on the rise.

ESO: Background information: Rating agencies http://www.europeansources.info/record/rating-agencies-2/

ESO: Background information: The case for a European public credit rating agency http://www.europeansources.info/record/the-case-for-a-european-public-credit-rating-agency/

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