Moody’s Bond Ratings in Historical Perspective: Their Purpose and Performance

Financial Forum

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Field Value
 
Title Moody’s Bond Ratings in Historical Perspective: Their Purpose and Performance
 
Creator W, Berry K
 
Subject Moody’s, bond ratings, through-the-cycle, structural default analysis, Great Depression
 
Description The securities rating industry has been heavily criticized for its subprime mortgage ratings that performed so poorly during the 2007-9 subprime crisis. This chapter traces the history of Moody’s bond ratings since their inception in 1909. The stated purpose of the ratings was as an aid in investment analysis with the large number of U.S. securities outstanding at the time. However, evidence is reviewed that the Great Depression was a turning point for ratings, with a switch in focus from investment analysis to default analysis. The ratings during this period were compared with a structural default analysis in terms of their ability to rank order defaults that occurred during the Great Depression. The conclusion is that advances in finance has created technologies that tend to outdate the ratings technology.  
 
Publisher PiscoMed Publishing Pte Ltd
 
Contributor
 
Date 2018-09-05
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://ojs.piscomed.com/index.php/FF/article/view/695
10.18282/ff.v0i0.695
 
Source Financial Forum; Online First
2251-2659
 
Language eng
 
Relation http://ojs.piscomed.com/index.php/FF/article/view/695/649
 
Rights Copyright (c) 2019 Berry K W
http://creativecommons.org/licenses/by-nc/4.0
 

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