The Private Use of Credit Ratings: Evidence from Investment Mandates
49 Pages Posted: 16 Jul 2018 Last revised: 21 Dec 2018
Date Written: December 21, 2018
Investment mandates are fundamental to the delegation of asset management. Mandates of fixed income mutual funds often use credit ratings to demarcate the investable universe. We examine changes in the use of credit ratings in these mandates since the financial crisis. The use of ratings in mandates has increased from an already high level before the crisis. Fixed income markets’ extensive and continued reliance on credit ratings points to a lack of practically useful alternatives.
Keywords: Credit ratings, investment mandates, delegated asset management, financial crisis
JEL Classification: G24, G23, G01
Suggested Citation: Suggested Citation