European versus Anglo-Saxon Credit View: Evidence from the Eurozone Sovereign Debt Crisis
44 Pages Posted: 19 Dec 2016 Last revised: 29 Apr 2018
Date Written: April 23, 2018
We analyze whether different intensities of country ties to Europe affected the assignment of sovereign credit ratings during the Eurozone sovereign crisis. We find that Fitch, the rating agency among the “Big Three” with significantly stronger ties to Europe, was more reluctant than its two more US-tied peers to downgrade Eurozone countries during the crisis. The rating actions of Fitch were, however, largely ignored by the bond market. Our results thus cast doubt on the benefits of an often-suggested independent European credit rating agency.
Keywords: Credit rating agencies, sovereign debt crisis, Eurozone, home bias
JEL Classification: F65, G01, G14, G18, G24
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