Rating agencies: conflicts of interests

Abstract

This project discusses about Credit Rating Agencies and the conflict of interests that they face with its clients; those entities assessed and being rated. This is a very interesting topic since, as it will be analysed, Credit Rating Agencies´ performance have huge impact in the economy, affecting the whole world. Nevertheless, few people know about them, how they work, its composition, and the crucial role that they play in the economy. By writing this essay I want people to realize how important those entities are due to its reference role which facilitate funding worldwide. However, its business practice is still too murky so stricter rulers and supervision measures are required. For investigating this subject, a research of different economic magnitudes such as risk premium and market index, from two different countries, will be done. Also a real case will be presented as a consequence of the bad practice of Credit Rating Agencies due to lack of enough supervision