Was Regulation (EC) No 1060/2009 on Credit Rating Agencies Effective?

Olivier Nataf, Lieven De Moor, Rosanne Vanpée

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The purpose of this paper is (1) to put the Regulation (EC) No 1060/2009 on Credit Rating Agencies (henceforth, CRA I) into historical perspective, including a comparison with the Dodd–Frank Act, and (2) to examine whether the CRA I Regulation effectively influenced the ratings issued by credit rating agencies in EU financial markets. This paper presents a historical review of regulations existing prior to the 2007 crisis and describes the mechanisms put in place after the event both in the USA and the EU. Following this part, two ordered logistic regressions based on a sample of ratings attributed to Eurozone companies examine the influence of CRA I on the rating process. A study of the repercussions of Regulation (EC) No 1060/2009 on ‘false warnings’ issued by rating agencies is finally presented in the last section of this paper. The regressions point out that CRA I had a double impact on how rating agencies use financial, accounting and geographical indicators during the rating process, as it influenced (1) the grading process and (2) the magnitude of the up- or downgrades. It is also underlined in this study that the regulation had no significant influence on ‘false warnings’. The findings of this study may help EU regulators to better design future regulations on rating agencies and to curb weaknesses of CRA I that were not addressed by ‘CRA II’ (2011) and ‘CRA III’ (2013) regulations. To our knowledge, this paper is the first one to examine the efficiency of the CRA I regulation and to adopt a European-oriented approach by focusing on Eurozone members.

Original languageEnglish
Pages (from-to)299-316
Number of pages18
JournalJournal of Banking Regulation
Issue number4
Publication statusPublished - Nov 2018


  • CRA I
  • Credit rating
  • False warnings
  • Regulation (EC) No 1060/2009


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