Market Structure and Rating Strategies in Credit Rating Markets : A Dynamic Model with Matching of Heterogeneous Bond Issuers and Rating Agencies
This paper investigates the impact of rating agencies in a market with asymmetric information. In particular, the role of credit rating agencies as an intermediary between investors and bond issuers is discussed. We model this setting in a dynamic framework in which both rating agencies and bond issuers are of heterogeneous quality. Rating agencies can apply costly research technology to reveal th