Explain the concept of credit rating agency
CRA’s [Credit Rating Agencies]- CRA’s are an integral part of the modern capital markets. CRA’s regularly analyzed the financial position of corporations and assign and revise the ratings for their securities. History of Credit Rating Agencies. The concept of using rating agencies to assess the level of risk associated with a debt arose around the beginning of the 20th century when three major credit rating agencies were formed. Although additional rating agencies were formed in subsequent years, the original rating agencies – Fitch, Moody’s, and Credit rating agencies came under heavy scrutiny and regulatory pressure following the financial crisis and Great Recession of 2007 to 2009. It was believed that CRAs provided ratings that were