Abstract

http://ssrn.com/abstract=1109075
 
 

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To Judge Leviathan: Sovereign Credit Ratings, National Law, and the World Economy


Christopher M. Bruner


Washington and Lee University - School of Law

Rawi Abdelal


Harvard University - Business, Government and the International Economy Unit


Journal of Public Policy, Vol. 25, No. 2, pp. 191-217, August 2005

Abstract:     
Recent decades have witnessed the remarkable rise of a kind of market authority almost as centralized as the state itself - two credit rating agencies, Moody's and Standard and Poor's. These agencies derive their influence from two sources. The first is the information content of their ratings. The second is both more profound and vastly more problematic: ratings are incorporated into financial regulations in the United States and around the world. In this article we clarify the role of credit rating agencies in global capital markets, describe the host of problems that arise when their ratings are given the force of the law, and outline the alternatives to the public policy dilemmas created when ratings receive a public imprimatur. We conclude that agencies designated for regulatory purposes should be required to provide more nuanced ratings exposing their perceptual and ideological underpinnings (especially for sovereigns), and facilitating consideration of alternatives to ratings-dependent regulation.

Number of Pages in PDF File: 27

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Date posted: March 19, 2008  

Suggested Citation

Bruner, Christopher M. and Abdelal, Rawi, To Judge Leviathan: Sovereign Credit Ratings, National Law, and the World Economy. Journal of Public Policy, Vol. 25, No. 2, pp. 191-217, August 2005. Available at SSRN: http://ssrn.com/abstract=1109075

Contact Information

Christopher M. Bruner
Washington and Lee University - School of Law ( email )
Lexington, VA 24450
United States
Rawi Abdelal (Contact Author)
Harvard University - Business, Government and the International Economy Unit ( email )
Morgan Hall 287
Harvard Business School
Boston, MA 02163
United States
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