Volume : V, Issue : II, February - 2016

IMPORTANCE OF CREDIT RATING AND RATING AGENCIES FOR INVESTERS IN FINANCIAL SYSTEM

Rinoj P. K.

Abstract :

 Credit rating agencies play an important role in assessing risk and its location and distribution in the financial system. By facilitating investment decisions they can help investors in achieving a balance in the risk return profile and at the same time assist firms in accessing capital at low cost. CRAs can thus potentially help to allocate capital efficiently across all sectors of the economy by pricing risk appropriately. However, in view of the fact that CRAs that rate capital market instruments are regulated by SEBI and that entities regulated by other regulators (IRDA, PFRDA and RBI) predominantly use the ratings, it was felt necessary to institute a comprehensive review of the registration, regulatory and supervisory regime for CRAs. The major motivation for the exercise was to look at inter regulatory coordination so that all interested stake holders have an institutional mechanism for providing inputs feed back to ensure realization of the objective behind the regulation of CRAs. Adding a further dimension to this enquiry, the subprime crisis has attracted considerable adverse attention worldwide on the role of CRAs enhancing the need for this review.

Keywords :

Article: Download PDF   DOI : 10.36106/ijsr  

Cite This Article:

RINOJ P.K. Importance of Credit Rating and Rating Agencies for Investers in Financial System International Journal of Scientific Research, Vol : 5, Issue : 2 February 2016

Number of Downloads : 797

References :