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date: 13 June 2021

Abstract and Keywords

Ratings seem increasingly central to the regulatory system of modern capitalism and therefore to governments everywhere. Getting credit ratings “right” therefore seems vitally important to many observers. But in pursuing improvement in the rating system one needs to appreciate the challenges and limits to rating. This article argues, after due attention to the origins and work of the agencies, that our expectations of the agencies are founded on a limited rationalist or machine-like understanding of the workings of capital markets. A more appropriately social (and dynamic) view of markets makes the challenge of effective rating even more daunting. The increasingly volatile nature of markets has created a crisis in relations between the agencies and governments, which increasingly seek to monitor their performance and stimulate reform in their procedures.

Keywords: credit rating, regulatory system, capitalism, capital markets, market reforms, rating agencies

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