To Err is Human: Rating Agencies and the Interwar Foreign Government Debt Crisis

46 Pages Posted: 6 Jun 2011

See all articles by Marc Flandreau

Marc Flandreau

Centre for Economic Policy Research (CEPR)

Norbert Gaillard

NG Consulting

Frank Packer

Bank for International Settlements (BIS)

Multiple version iconThere are 2 versions of this paper

Date Written: December 2010

Abstract

During the 1930s, rating agencies took up a central role in regulatory supervision that they still have today. The proximate cause for this changeover was the economic shock of the Great Depression. Exploring the performance of rating agencies in assessing the risks of sovereign debt, an important segment of the bond market, we do not find that superior forecasting capacities can explain the agencies' growing importance.

Keywords: sovereign credit ratings, Great Depression, financial crisis, international bond markets

JEL Classification: E44, F34, G15, N20

Suggested Citation

Flandreau, Marc and Gaillard, Norbert and Packer, Frank, To Err is Human: Rating Agencies and the Interwar Foreign Government Debt Crisis (December 2010). BIS Working Paper No. 335. Available at SSRN: https://ssrn.com/abstract=1858565

Marc Flandreau (Contact Author)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Norbert Gaillard

NG Consulting ( email )

France

HOME PAGE: http://www.norbertgaillard.com/

Frank Packer

Bank for International Settlements (BIS) ( email )

CH-4002 Basel, Basel-Stadt
Switzerland
4161 280 8449 (Phone)

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