Dagong's Entry into the Sovereign Credit Ratings' Market

Posted: 24 Sep 2014

See all articles by Thomas Reinhard Kremser

Thomas Reinhard Kremser

Vienna University of Economics and Business - Institute for Finance, Banking and Insurance

Daniela Kremslehner

Vienna University of Economics and Business - Department of Finance, Accounting & Statistics

Date Written: June 12, 2014

Abstract

This paper examines the 2010 entry of Dagong Global Credit Rating into the sovereign credit ratings market. We investigate the driving factors of Dagong and of the three incumbent rating agencies, Standard & Poor's, Moody's Investors Service and Fitch Ratings. We find significant differences between the first sovereign ratings announcement of Dagong and the ratings issued by the incumbent rating agencies. Dagong puts less weight on economic development and more on government debt growth, while default history is not relevant for Dagong's ratings. These findings explain why Dagong issues higher ratings for emerging markets and lower ratings for advanced economies.

Keywords: Sovereign credit ratings, Credit rating agencies, Market Entry

JEL Classification: G10, G14, G24

Suggested Citation

Kremser, Thomas Reinhard and Kremslehner, Daniela, Dagong's Entry into the Sovereign Credit Ratings' Market (June 12, 2014). Available at SSRN: https://ssrn.com/abstract=2500242

Thomas Reinhard Kremser (Contact Author)

Vienna University of Economics and Business - Institute for Finance, Banking and Insurance ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

Daniela Kremslehner

Vienna University of Economics and Business - Department of Finance, Accounting & Statistics ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

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