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

Boumparis, Periklis, Milas, Costas, Panagiotis, Theodore, (2017), “Fair or not? How credit rating agencies calculated their ratings during the Eurozone crisis”, LSE EUROPP, 23 March

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.

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