'Information as a Condition of Justice in Financial Markets: The Regulation of Credit-Rating Agencies

In Lisa Maria Herzog (ed.), Just Financial Markets? Finance in a Just Society. Oxford: Oxford University Press. pp. 250-270 (2017)
Boudewijn De Bruin
University of Groningen
This chapter argues for deregulation of the credit-rating market. Credit-rating agencies are supposed to contribute to the informational needs of investors trading bonds. They provide ratings of debt issued by corporations and governments, as well as of structured debt instruments (e.g. mortgage-backed securities). As many academics, regulators, and commentators have pointed out, the ratings of structured instruments turned out to be highly inaccurate, and, as a result, they have argued for tighter regulation of the industry. This chapter shows, however, that the role of credit-rating agencies in achieving justice in finance is not as great as these commentators believe. It therefore argues instead for deregulation. Since the 1930s, lawgivers have unjustifiably elevated the rating agencies into official, legally binding sources of information concerning credit risk, thereby unjustifiably causing many institutional investors to outsource their epistemic responsibilities, that is, their responsibility to investigate credit risk themselves.
Keywords conflicts of interest  credit ratings and rating agencies  epistemology  finance  information and product quality  justice  markets  regulation  securities
Categories (categorize this paper)
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

Our Archive
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

No references found.

Add more references

Citations of this work BETA

No citations found.

Add more citations

Similar books and articles

CSR Rating Agencies: What is Their Global Impact?Steven Scalet & Thomas F. Kelly - 2010 - Journal of Business Ethics 94 (1):69-88.
Optimizing Consumer Credit Markets and Bankruptcy Policy.Ronald J. Mann - 2006 - Theoretical Inquiries in Law 7 (2):395-430.
An Epistemology of the Financial Crisis.Richard Robb - 2013 - Critical Review 25 (2):131-161.
Taking Credit.William J. Graham & William H. Cooper - 2013 - Journal of Business Ethics 115 (2):403-425.
Reconceptualizing the Regulation of Global Finance.Ross P. Buckley - 2016 - Oxford Journal of Legal Studies 36 (2):242-271.


Added to PP index

Total views
48 ( #140,729 of 2,312,294 )

Recent downloads (6 months)
22 ( #22,483 of 2,312,294 )

How can I increase my downloads?

Monthly downloads

My notes

Sign in to use this feature