Credit Rating Industry in Sri Lanka
Nelkani Mayakaduwa and R P C R Rajapakse ( 2019) " Credit rating industry in Sri Lanka"© FEB 2019 | IRE Journals | Volume 2 Issue 8 | ISSN: 2456-8880 pp42-59
Posted: 24 May 2019
Date Written: February 13, 2019
An efficient financial system facilitates the optimal allocation of resources towards economic development of a country by allocating resources efficiently. Markets which are a part of the financial system, support efficient allocation of funds, thus development of capital markets play a vital role in economic development of a country. Information asymmetry and lack of information can fear away investors, while a “credit rating” assigned by an independent party can attract investors to markets. The purpose of this study is to identify the current trend of the credit rating industry in Sri Lanka (SL). Data were obtained mainly from interviews and other secondary sources such as annual reports of SEC, and rating reports etc. Quantitative data were analyzed using; ratio analysis and percentage calculations, while qualitative data were analyzed using content analysis. The study revealed that underdeveloped capital markets and low financial literacy hinder the use of credit ratings in SL influencing negatively on investments.
Keywords: Credit Ratings, Credit Rating Agencies, Sri Lanka
JEL Classification: D53, E44, G10
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