Advertisement-financed credit ratings

This paper investigates the incentives of a credit rating agency (CRA) to generate accurate ratings under an advertisement-based business model. To this end, we study a two-period endogenous reputation model in which a CRA can increase the precision of its ratings by exerting effort. The CRA receives a revenue not from rating fees, as is standard in the literature, but through online advertising. We show that the advertisement-based business model provides sufficient incentives for the CRA to improve the precision of signals at intermediate levels of reputation. Furthermore, we identify conditions under which truthful reporting is incentive compatible.

THE ROLE OF SMALL AND MEDIUM-SIZED BUSINESSES IN THE ECONOMY OF THE CHUVASH REPUBLIC

The role of small business in the economy of the country and regions is determined by two indicators: 1) the number of small and medium-sized businesses (SMEs), including individual entrepreneurs, in the total number of economic entities; 2) the contribution of SMEs to GDP (GRP) and production (work, services). The SME sector is primarily focused on the needs of its region. Taking into account the existing deep differentiation of regions in terms of the level of socio – economic development of regions, the issues of the development of the small and medium – sized business sector in the constituent entities become especially relevant. The article explores the role of small and medium-sized businesses in the economy of the Chuvash Republic based on the official data of Rosstat, the Rating Agency Russia Today, and regional normative acts. The article uses data of continuous statistical observation of the activities of SMEs. The data for the Chuvash Republic are presented in comparison with the average Russian indicators for the regions of the Volga Federal District (VFD). The study found that the Chuvash Republic lags far behind other regions of the district and the country in terms of indicators characterizing the development of SMEs.

Rankings of the Largest Russian Organizations, Audit Groups and Networks Following the Results of 2020

Th e annual 26th edition of the rating of the largest domestic audit organizations and groups, compiled by the RAEX rating agency, demonstrates the steady growth of this professional services market. Misfortune — in the form of a lockdown and a distant move — helped.

An Analysis of Bank Financial Strength Ratings and Credit Rating Data

In this study, data from two credit rating agencies are analyzed to consider how different Bank Financial Strength Ratings and Credit Ratings from two rating agencies compare. To my knowledge, prior research has not analyzed Bank Financial Strength Ratings from different rating agencies, nor has it compared Bank Financial Strength Ratings to general credit ratings. These facts make this research unique. Univariate analyses are utilized to show relationships in the ratings data, along with parametric and non-parametric tests to make statistical inferences about the ratings data. There are five findings. First, ratings from different rating agencies are highly correlated. Second, different types of ratings from the same rating agency are highly correlated. Third, bank financial strength ratings are more conservative than credit ratings. Fourth, bank financial strength ratings declined in rating more quickly at the start of the financial crisis. Fifth, bank financial strength ratings from the Kroll Bond Rating Agency were more conservative than ratings from Moody’s Investors Service. The research findings and results are important for investors who consider ratings agency data to determine the risk of banking institutions. The results are also important to businesses that rely on bank credit rating data and policy makers who regulate banking institutions.

Preparing for an Uncertain Future

This chapter discusses the report of the Wall Street Journal about Stuyvesant Town, one of the biggest, most high-profile deals of the commercial real-estate boom, being in danger of imminent default. It explains how Tishman Speyer was stuck at $139 million rather than raising the net operating income up to $252 million by 2009, which MetLife had promised could be done. It also mentions RealPoint LLC, a credit-rating agency that estimated the property to only be worth $2.1 billion — less than half the purchase price from the time it has been purchased in 2006. The chapter focuses on the impacts of the recession to Tishman Speyer and all owners of real-estate, which had been precipitated by a collapse in the inflated housing market. It refers to apartment prices in Manhattan that had fallen sharply as 2009 wore on and prices that went down by 25 percent compared to 2008.

АНАЛИЗ ЭФФЕКТИВНОСТИ ПРЕДЛОЖЕННЫХ ПРАВИТЕЛЬСТВОМ РФ МЕР ДЛЯ ПОДДЕРЖКИ БИЗНЕСА В УСЛОВИЯХ КОРОНАВИРУСНОЙ ИНФЕКЦИИ

Целью данной работы стало доказательство воздействия пандемии на бизнес и обоснование возможностей России к преодолению сложившейся ситуации. Методология проведения исследования. Анализ предлагаемых мер оценивается, базируясь на аналитических данных EUROPEAN RATING AGENCY, a.s. В статье приведены 3 варианта макроэкономического прогноза: оптимистичный, пессимистичный и базовый. Теоретический анализ. В статье рассматривается проблема взаимодействия между субъектами малого и среднего бизнеса и государством, связанная с реализацией государственных мер поддержки малого и среднего бизнеса. Проведен анализ текущей ситуации в секторе малого и среднего бизнеса. Дана оценка эффективности мер государственной поддержки субъектов малого и среднего бизнеса, с учетом восприятия данных мер со стороны предпринимательского сообщества. Научная новизна данной работы заключается в предложении мер по предоставлению экономике ликвидности. Предложены рекомендации по повышению эффективности системы государственной поддержки субъектов малого и среднего бизнеса. В статье сделаны выводы о том, что крупный бизнес, обладающий определенным запасом прочности, заручившись финансовой поддержкой со стороны Правительства РФ, не испытывает существенного влияния COVID-19. Малый и средний бизнес самостоятельно обеспечить себя в период экономического кризиса, связанного с пандемией, не в состоянии.

Features of the Russian Small and Medium-sized Enterprise Lending Market at the Present Stage

Lending is one of the factors in the development of small and medium-sized businesses. In recent years, the Russian state has made serious efforts to increase the availability of borrowed funds for business and uses the lending market as a tool to accelerate economic growth. The work shows that the same mechanism works as one of the most rapid and effective in the implementation of anti-crisis policies, which can be observed, including during the 2020 pandemic.The purpose of the study is to identify the features and problems of the modern stage of the development of the lending market for small and medium-sized enterprises in Russia. The article considers two levels of financial support for small and medium-sized businesses: federal and regional. Today they are represented by different institutions that complement each other. However, despite large-scale state programs to stimulate lending, the share of small and medium-sized enterprises using borrowed funds remains low and insufficient for the active development of this sector of the economy.The study used expert and statistical analysis, the information base for the study was statistics from the Bank of Russia, the Federal Tax Service, legislation in the field of entrepreneurship, data from executive authorities, analytical reports from the Bank of Russia, the Accounts Chamber of Russia, and the Expert RA rating agency

Legislative pressure and credit rating agency behavior

This study investigates whether legislative pressure influences credit rating agency (CRA) behavior. It covers a time period in which the European Union moves from exerting minimal to intense legislative pressure on CRAs, providing an almost ideal context for analyzing if and how CRAs are affected by this pressure. Two possible outcomes are discussed: 1) more timeliness in the flow of information and 2) more stickiness in the flow of information. The analysis is based on an examination of market reactions following CRA announcements between 2000 and 2019. The results show that the market reactions after CRA announcements decrease when legislative pressure increases. The interpretation is that as legislative pressure increases, the flow of information from CRAs becomes stickier. This confirms that legislative initiatives that put pressure on CRAs have an effect, evidence that legislators’ intention to change behavior by threatening or initiating new regulations works, which confirms assumptions underlying the theory of legislative threats (Halfteck, 2008). A reasonable interpretation of legislators’ push for changes in this context is that they want to see a faster flow of information. The results, however, show the opposite. A plausible explanation for this is increased caution on the part of CRAs because if in retrospect, the information in an announcement turns out to be wrong or misleading, the ensuing criticism could lead to additional pressure.

The Existing and Proposed Credit Rating Agency (CRA) Business Models and Compensation Models Are Inefficient

Credit ratings agencies (CRAs) are prone to various antitrust and conflict-of-interest problems that arise from their regulation and their business and compensation models. CRAs have played a critical role in global capital markets for the last few decades, and the inefficiencies inherent in the compensation contracts, and business models of CRAs were clearly illustrated during the Global Financial Crisis of 2007-2011, during which ABS trusts and some large companies suddenly defaulted without prior downgrades of their ratings – it's well known that markets often price in potential defaults or down-grades before CRAs revise their ratings downwards. This chapter explores the inefficiencies of the existing and proposed CRA business models and compensation models.