Credit ratings and market over-reliance : an international legal analysis / by Francesco De Pascalis.
2017
K1114.7 .D4 2017 (Map It)
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Details
Title
Credit ratings and market over-reliance : an international legal analysis / by Francesco De Pascalis.
Published
Leiden ; Boston : Brill Nijhoff, [2017]
Call Number
K1114.7 .D4 2017
ISBN
9789004341845 (hardback : alk. paper)
9004341846 (hardback : alk. paper)
9789004341852 (ebook)
9004341846 (hardback : alk. paper)
9789004341852 (ebook)
Description
xiv, 231 pages ; 25 cm.
System Control No.
(OCoLC)985966817
Summary
Taking position from the recent 2007-2009 financial crisis, 'Credit Ratings and Market Over-reliance: An International Legal Analysis' by Francesco De Pascalis provides an in depth legal and regulatory analysis of the concept of over-reliance in the use of ratings and how regulation facilitates over-reliance is different from mere reliance on credit ratings. Not only does the book provide an incisive doctrinal analysis of the concept of over-reliance, it also considers over-reliance from a comparative and international perspective by reviewing legal and regulatory developments under European Union and US law and how over-reliance has been addressed in international financial regulation.
Note
Taking position from the recent 2007-2009 financial crisis, 'Credit Ratings and Market Over-reliance: An International Legal Analysis' by Francesco De Pascalis provides an in depth legal and regulatory analysis of the concept of over-reliance in the use of ratings and how regulation facilitates over-reliance is different from mere reliance on credit ratings. Not only does the book provide an incisive doctrinal analysis of the concept of over-reliance, it also considers over-reliance from a comparative and international perspective by reviewing legal and regulatory developments under European Union and US law and how over-reliance has been addressed in international financial regulation.
Bibliography, etc. Note
Includes bibliographical references (pages 203-224) and index.
Available in Other Form
Online version: De Pascalis, Francesco, author. Credit ratings and market over-reliance Leiden : Brill Nijhoff, 2017 9789004341852 (DLC) 2017022037
Record Appears in
Table of Contents
Foreword
ix
Preface
xi
List of Abbreviations
xi
1.
Reliance Versus Over-reliance
1
1.1.
Contextual Setting
1
1.2.
Holistic Study of Over-reliance
5
1.3.
Book Structure
8
2.
`Good' Aspects of Credit Ratings: A Basis for Reliance
13
Introduction
13
2.1.
Importance of Credit Ratings in the Financial Markets: The Reliance of the Private Sector
14
2.1.1.
Credit Rating Industry: Origins and Development
14
2.1.2.
Credit Ratings: Categories and Formation Process
18
2.1.3.
Credit Ratings as Opinions on Creditworthiness
22
2.1.4.
CRA Informational Services
23
2.1.5.
CRA Monitoring Services: Outlook and Watch-list Procedures
26
2.1.6.
Users of CRA Services
28
2.2.
Public Sector's Reliance on Credit Ratings
29
2.2.1.
CRAs as Certification Providers
29
2.2.2.
Clarifying the Certification Function of CRAs
31
2.2.3.
Understanding the Regulatory Reliance on Credit Ratings
33
2.2.4.
Mapping the Regulatory Use of Credit Ratings
37
Concluding Remarks
42
3.
Reliance Versus Influence: A Roadmap toward the Risk of Over-reliance
43
Introduction
43
3.1.
Negative Effects of Rating Changes and the Role of Ratings-based Regulation
45
3.1.1.
Downgrades, Rating Triggers and Liquidity Problems
45
3.1.2.
Cliff-Edge Effects and Herd Behaviours
50
3.1.3.
Systemic Risk and Spill-over Effects Across Markets
52
3.1.4.
Ratings-based Regulation and Its Implications: A Critical Review
54
Concluding Remarks
57
4.
Over-reliance on External Credit Ratings: In Search of a Meaning
59
Introduction
59
4.1.
Understanding Over-reliance on Credit Ratings
61
4.1.1.
Detecting the Phenomenon: Over-reliance in the us Pre-crisis Regulatory Debate on CRAs
61
4.1.2.
Over-reliance in the e u Pre-crisis Regulatory Debate on CRAS
64
4.1.3.
Sources of Over-reliance: Ratings-based Regulation Versus the Structured Finance Sector
67
4.1.4.
Closing the Gap: Defining Over-reliance on External Credit Ratings
72
Concluding Remarks
74
5.
Regulatory Approaches at the National, International and Regional Levels to Address Over-reliance on Credit Ratings
76
Introduction
76
5.1.
Evolution of the Regulatory Debate
77
5.1.1.
US Level: Section 939A of the Dodd-Frank Act: Reliance Versus Over-reliance
77
5.1.2.
FSB Principles for Reducing Reliance on Credit Ratings: Searching for Over-reliance
82
5.1.3.
European CRA Regulation 111: Confirming Over-reliance
86
Concluding Remarks
89
6.
Regulatory Approaches against Over-reliance and Their Implementation
91
Introduction
91
6.1.
In Search of Effectiveness
93
6.1.1.
Normative Approaches in Focus
93
6.1.2.
Implementation Process in Focus
97
6.2.
Status of the us Reforms under Section 939A of the Dodd-Frank Act
103
6.2.1.
Early Debate on Section 939A
103
6.2.2.
US Federal Agencies Reform Processes
108
6.2.3.
us Reforms: A Critical Review in Relation to the Risk of Over-reliance
120
6.3.
Status of the EU Reforms under the CRA Regulation III
125
6.3.1.
Work of the ESAS
125
6.3.2.
ERA's Mandate
128
6.3.3.
ESMA's Mandate
133
6.3.4.
Perspectives on the EU Approach in the Future
136
6.4.
EU Approach: A Critical Review
145
6.5.
More Independent Credit Risk Analysis: From Theory to Practice
146
6.5.1.
Status of Implementation
146
6.5.2.
Second Level of the Approach: A Critical Review
147
Concluding Remarks
152
7.
Reviewing the Debate on Over-reliance and Approaches against It
155
Introduction
155
7.1.
Credit Rating References and the `Official Seal of Approval': What Has been Missed?
156
7.1.1.
CRA Market Failures and Regulatory Interventions
156
7.1.2.
Evidence of Over-reliance in the Structured Finance Sector
161
7.1.3.
Evidence of Over-reliance on Credit Rating Legislative References
173
7.2.
Anticipating the Post-crisis Debate on Over-reliance
181
7.2.1.
CRA Message to the Regulators
181
7.2.2.
CRA Message to the Users of Credit Ratings
188
Concluding Remarks
190
8.
Conclusions
192
8.1.
Taking Stock of the Situation
192
8.2.
Developing an Assertion into Certainty: Providing Evidence of Over-reliance
193
8.3.
Encouraging More Dialogue and Coordination at All Levels
194
8.4.
Ensuring More of a Level-playing Field among Credit Risk Assessment Tools
196
8.5.
Looking Ahead
198
Concluding Remarks
200
Bibliography
203
Index
225