Website

The impact of regulatory changes on rating behaviour

Retrieved on: 
Tuesday, April 2, 2024
Długosz, Disagreement, Pi bond, Direct lending, Key, Research Papers in Economics, Finance Secretary (India), University of Oxford, STS, Journal of Economic Perspectives, International, American Economic Review, Life, Columbia Business School, British Academy of Management, Risk assessment, ABS, Rating, EBA, Development, Reputational damage, OBS, CRA, Bond credit rating, Cras, Journal of Monetary Economics, CDO, Becker, Paper, 2007–2008 financial crisis, Raja, University, Environment, Journal of Financial Economics, Perception, H3, Website, Securitization, Working paper, Market, Collection, Total, European Banking Authority, Quarterly Journal of Economics, BBB, Whetten, Column, ESMA, European Journal, Issuer, Asset quality, Information revolution, Federal Reserve Bank, OLS, Statistics, PDF, Private, ECB, Surety, Weighted-average life, CCC, European Commission, Social science, Journal of Financial Stability, JEL, Real, Bias, Journal, Research, Classification, Certification, Commission, Credit, The Journal of Finance, Literature, Karel Škréta, European Central Bank, AA, Finance Research Letters, Origination (telephony), Monetary economics, Section 5, Xia, Kraft Foods, Government, AAA, Mukherjee, Finance, Deku, DOI, White, Risk, IOSCO, MBS, OECD, Wang, Section 4, University Challenge 2013–14, Section 3, Ashcraft, Financial management, Accounting, Financial economics, Fannie Mae, Conference, Pressure, Central bank, Griffin, University of Michigan, Systematic review, EPRS, Freddie Mac, Loan, BCBS, Palgrave Macmillan, R2, Microeconomics, Quarterly Journal, Financial statement analysis, The Japanese Economic Review, Christian Social Union (UK), Green, University of Huddersfield, PSM, Management, Security (finance), Security, Civil service commission, Private placement, American Economic Journal, GFC, Reproduction, IMF, Small business, Trustee, Data

Abstract

Key Points: 
    • Abstract
      We examine rating behaviour after the introduction of new regulations regarding Credit Rating
      Agencies (CRAs) in the European securitisation market.
    • There is empirical evidence of rating catering in the securitisation market in the pre-GFC period (He et al.,
      2012; Efing and Hau, 2015).
    • Competition among
      CRAs could diminish ratings quality (Golan, Parlour, and Rajan, 2011) and promotes rating shopping by
      issuers resulting in rating inflation (Bolton et al., 2012).
    • This paper investigates the impact of the post-GFC regulatory changes in the European
      securitisation market.
    • In 2011, in addition to the creation of
      European Securities and Markets Authority (ESMA), a regulatory and supervisory body for CRAs was
      introduced.
    • We examine how rating behaviours have changed in the European securitisation market after the
      introduction of these new regulations.
    • We utilise the existence of multiple ratings and rating agreements between
      CRAs to identify the existence of rating shopping and rating catering, respectively (Griffin et al., 2013; He
      et al., 2012; 2016).
    • We find that the regulatory changes have been effective in tackling conflicts of interest between issuers
      and CRAs in the structured finance market.
    • Rating catering, which is a direct consequence of issuer and
      CRA collusion, seems to have disappeared after the introduction of these regulations.
    • There is empirical evidence of rating catering in the securitisation market in
      the pre-GFC period (He et al., 2012; Efing and Hau, 2015).
    • Competition among CRAs could diminish ratings quality (Golan, Parlour,
      and Rajan, 2011) and promotes rating shopping by issuers resulting in rating inflation (Bolton et
      al., 2012).
    • This paper investigates the impact of the post-GFC regulatory changes in the European
      securitisation market.
    • In 2011, in addition
      to the creation of European Securities and Markets Authority (ESMA), a regulatory and
      supervisory body for CRAs was introduced.
    • We find that the regulatory changes have been effective in tackling conflicts of interest
      between issuers and CRAs in the structured finance market.
    • Rating catering, which is a direct
      consequence of issuer and CRA collusion, seems to have disappeared after the introduction of
      these regulations.
    • Investors who previously demanded higher spreads for rating agreements for a
      multiple rated tranche, did not consider the effect of rating harmony as a risk in the post-GFC
      period.
    • Regarding rating shopping, we find that the effectiveness of the changes has been limited,
      potentially for two reasons.
    • Additionally, we also find that rating over-reliance might still be an issue, especially
      Rating catering is a broad term and it can involve rating shopping.
    • They re-examine the rating shopping and rating
      catering phenomena in the US market by looking at the post-crisis period between 2009 and 2013.
    • Using 622 CDO tranches, they also observe the existence of rating shopping and the diminishing
      of the rating catering.
    • Firstly, our main focus is the EU?s CRA Regulation and its effectiveness in reducing
      rating inflation and rating over-reliance.
    • To the best of our knowledge, this paper is the first to
      examine the effectiveness of the EU?s CRA regulatory changes on the investors? perception of
      rating inflation in the European ABS market.
    • Hence, the coverage and quality of our dataset constitutes significant addition
      to the literature and allows us to test the rating shopping and rating catering more authoritatively.
    • The following section reviews the literature
      on securitisation concerning CRAs and conflicts of interest, and outlines the regulatory changes
      introduced in the post-GFC period.
    • Firstly, ratings became ever more important as the Securities and
      Exchange Commission (SEC) 5 began heavily relying on CRA assessments for regulatory purposes
      (i.e.
    • the investment mandates that highlight rating agencies as the main benchmark for investment
      eligibility) (SEC, 2008; Kisgen and Strahan, 2010; Bolton et al., 2012).
    • issuers) as one of the main explanations for the rating inflation (He et al., 2011; 2012; Bolton
      et al., 2012; Efing and Hau, 2015).
    • Bolton et al., (2012) demonstrate that competition
      promotes rating shopping by issuers, leading to rating inflation.
    • The last phase, CRA III, was implemented in mid-2013 and involves an additional
      set of measures on reducing transparency and rating over-reliance.
    • As mentioned above, rating inflation can be caused by rating shopping
      In order to be eligible to use the STS classification, main parties (i.e.
    • The higher the difference in the number of ratings for a
      given ABS tranche, the greater the risk of rating shopping.
    • Alternatively, the impact of the new
      regulations could be limited when it comes to reducing rating shopping.
    • This is because, firstly,
      the conflict of interest between securitisation parties is not necessarily the sole cause for the
      occurrence of rating shopping.
    • L is a set of variables (Multiple ratings, CRA reported, Rating agreement) that
      we utilise interchangeably to capture the rating shopping and rating catering behaviour.
    • Hence, issuers are incentivised to report the highest possible rating and
      ensure each additional rating matches the desired level.
    • All in all, our results suggest that
      the new stricter regulatory measures have been effective in tackling conflicts of interest and
      reducing rating inflation caused by rating catering.
    • Self-selection might be a concern in analysing the impact of the
      new measures and investors? response with regard to the rating inflation.
    • This
      result is in line with the earlier findings suggesting that regulatory changes have reduced investors?
      suspicion of rating inflation and increased trust of CRAs.
    • Conclusion
      Several regulatory changes were introduced in Europe following the GFC aimed at tackling
      conflicts of interest between issuers and CRAs in the ABS market.
    • Utilising a sample of 12,469
      ABS issued between 1998 and 2018 in the European market, this paper examined whether these
      changes have had any impact on rating inflations caused by rating shopping and rating catering
      phenomena.
    • We find that the
      effectiveness of the changes has been more limited on rating shopping potentially for two reasons.
    • Tranche Credit Rating is the rating reported for a tranche at launch.

Business as usual: bank climate commitments, lending, and engagement

Retrieved on: 
Tuesday, April 2, 2024
Smoke, Carbon, Pillar, Worldwide, BPER, Employment, Disclosure, Economic methodology, LEI, Research Papers in Economics, CGD, Ibercaja Banco, Fossil, Mediobanca, Policy, UNEP, Crédit Mutuel, BBVA, Columbia Business School, Pari, Corporate finance, NBER, Principle, Agriculture, Société Générale, Insurance, Allied Irish Banks, Medical classification, Aluminium, Becker, Feedback, Central bank, Triodos Bank, Target, Prosocial behavior, Journal of Financial Economics, European Parliament, MIT, R2, Website, Behavior, Poisson, Human, UN, Climate, Crédit Agricole, United Nations, Transport, Coal mining, Syndicated loan, Investment, ABN AMRO, Politics, BSI, OLS, PDF, ECB, Unemployment, Econometrics, Ambition, Clutch (eggs), IEA, Social science, Engagement, JEL, Climate change, Risk management, Yb, Bias, Abanca, Research, Classification, UniCredit, A.5, NZIA, Divestment, Literature, IPCC, European Central Bank, AA, Geography, Natural gas, Green lending, Metal, The Borrowers, Elasticity, Stanford Social Innovation Review, Steven M. Greer, BMPS, Finance, Risk, Single, CaixaBank, PPML, BNP Paribas, European, Money, NLB Group, La Banque postale, Corporate welfare, Paris Agreement, A.2, ROW, OECD, Fraud, Coal, Frustration, Iron, Commerzbank, Bank of Åland, COP, Comparison, Overalls, All, Temperature, Banca Ifis, Conference, Pressure, Steel, International Energy Agency, United, Alpha Bank, Interest, SSRN, Justice, AAA, Deutsche Bank, Crawford, Science Based Targets initiative, GFANZ, Quarterly Journal, Rabobank, Hirschman, Effect, Carbon Disclosure Project, ESG, MSCI, Support, NZBA, Sierra Club, Map, Taxonomy, Q50, Banco Sabadell, Financial Times, Banco BPM, BPCE, Reproduction, Erste Group, Data, G21, Interval (mathematics), Cardboard
Key Points: 

    Consumer participation in the credit market during the COVID-19 pandemic and beyond

    Retrieved on: 
    Tuesday, April 2, 2024
    Tax, BLS, Face, La Cava, Liquidity, Journal of Economic Perspectives, Special, MRO, Recovery, Next Generation, Child, Interview, Transport, Attanasio, Consumer behaviour, DFR, Research Papers in Economics, Post-Keynesian economics, Gross domestic product, .177 caliber, Great Moderation, European Commission, Vaccine, Employment, Loan, PDF, Hall, House, ECB, Unemployment, Risk, Shock, Education, Rutgers University Press, Quarterly Journal, Policy, Real estate economics, EU Council, Woman, HHS, World Health Organization, Section 4, Clutch (eggs), MIT Press, Omicron, De Nederlandsche Bank, Social science, Federal Reserve Bank, Modigliani, EDS, JEL, Christian Social Union (UK), Female, Section 3, COVID-19, The Journal of Finance, Journal, Classification, News, Journal of Monetary Economics, Oxford Economic Papers, Death, Insurance, Journal of Economics, FRB, FED, Credit, HFCS, Economy, Deficit reduction, Vaccination, Princeton University Press, Literature, CES, Application, University of Oxford, Paper, R.E, Quarterly Journal of Economics, Section 2, European Central Bank, Civil service commission, C23, COVID, Conference, European Council, Central bank, Lifting, HH, Political economy, Consumer confidence index, European Parliament, MIT, RRF, Monetary economics, Household, Perception, Section 5, Bank, Structure, Reproduction, Website, HICP, Aimé Dossche, Working paper, Housing, Cambridge, Massachusetts, Heart, Fabbri, American Economic Review, Partner, Data, Collection, Probability, Government, Real estate

    We find that credit demand is highest when

    Key Points: 
      • We find that credit demand is highest when
        the first lockdown ends and it drops when supportive monetary compensation schemes are implemented.
      • Credit is more likely to be
        accepted under favourable borrowing conditions and after the approval of national recovery plans.
      • We also find
        that demographic, economic factors, perceptions and expectations are associated with the demand for credit and
        the credit grant.
      • First, it adds to a rapidly growing literature on household
        borrowing behaviour during the COVID-19 pandemic; see, for example, Ho et al.
      • We provide evidence that credit applications and credit acceptances display a different pattern over
        time.
      • Credit is more likely to be accepted under favourable borrowing conditions and after the
        approval of national recovery plans.
      • In almost all countries
        households are significantly less likely to apply and to get their credit approved than in Germany.
      • In line with literature, we show that
        demographic and economic factors affect the probability for credit applications and credit approval.
      • In addition,
        the paper shows that consumer perceptions and expectations matter when they decide to apply for credit.
      • Introduction

        The participation of households in the credit market receives wide attention in the consumer finance literature
        because consumer credit enters the monetary policy transmission mechanism through the so-called ?credit
        channel?: changes in credit demand and supply have an effect on consumers' spending and investment, which in
        turn affect economic growth.

      • We use microdata from the ECB?s Consumer Expectations Survey (hereinafter CES), a survey that
        measures consumer expectations and behaviour in the euro area.
      • Its panel dimension allows for an assessment of
        how consumer behaviour changes over time and how consumers respond to critical economic shocks.
      • This way we can gauge how credit applications and credit acceptances change under different, almost
        opposite, borrowing conditions.
      • We also distinguish between the demand for long-term secured loans (mortgages) and for short-term
        uncollateralized loans (consumer loans).
      • ECB Working Paper Series No 2922

        3

        We use probit models to estimate the probability of the consumer to apply for credit and the credit being granted.

      • The rate peaks in 2020Q3 which reflects the rebound in the demand for loans when the first lockdown ended.
      • In almost all countries households are significantly less likely
        to apply and to get their credit approved than in Germany.
      • However,
        when it comes to credit acceptance, we observe that the two groups of households are more similar.
      • Finally, we find some heterogeneity with respect to the type of credit, particularly between secured and unsecured
        debt.
      • The demand for
        consumer credit is insignificant for liquid households and decreases significantly for constrained households in
        the last two quarters of our timespan.
      • The first consists of a recently growing literature which
        explores consumer behaviour in the credit market during the COVID-19 pandemic, mostly in the United States.
      • Sandler and Ricks (2020) show that consumers did not use credit card debt for financial liquidity in the early stage
        of the COVID-19 pandemic.
      • (2020) report that credit card applications and new mortgage loans
        declined during the first months of the pandemic in regions with more unemployment insurance claims.
      • Lu and
        Van der Klaauw (2021) show that there was a sharp drop in consumer credit demand, especially for credit cards.
      • (2022) document that there was a substantial decrease in the usage of credit cards and home equity lines
        of credit by Canadian consumers.
      • Our paper is also consonant with studies on the association between financial and demographic factors and
        consumers? participation in the credit market as well as on the demand for specific types of credit.
      • January 2020 ? October 2020 - The two main events are the outbreak of the COVID-19 pandemic and the
        consequential lockdowns in the euro area.
      • 4 If the
        respondent has applied for more than one type of credit, she is asked to refer to the most recent credit application.
      • Between 2021Q3 and 2022Q3 the acceptance
        rate stays above the average values, mirroring the easing of credit standards for consumer credit and other lending
        to households during this period.
      • Second, we can investigate the presence of nonlinearities in how liquidity and the credit type interact in explaining credit applications.
      • (2023) ? who show that in the United States the local pandemic severity had a strong
        negative effect on credit card spending early in the pandemic, which diminished over time.
      • First, we select mortgages and consumer credit as the two mostly reported categories for secured and

        13

        The full estimation results are reported in Table 3.

      • The right-hand side panel of Figure 6 shows that the demand for consumer credit is insignificant for both liquid
        and illiquid households.
      • It also shows that
        subjective perceptions of credit access, financial concerns and expectations on interest rates matter for the demand
        for credit.
      • In Bertola, G., Disney
        R., and Grant, C. (eds) The Economics of Consumer Credit, Cambridge MA, MIT Press.
      • Horvath, A., Kay, B. and Wix, C. (2023) The COVID-19 shock and consumer credit: Evidence from credit card
        data.
      • Magri, S. (2007) Italian households? debt: The participation to the debt market and the size of the loan.

    Keyzoo Revolutionizes Car Key Solutions with Innovative Online Ordering Platform

    Retrieved on: 
    Saturday, March 2, 2024
    Uncertainty, Website, Artificial intelligence, Locksmithing, Online shopping

    Fort Lauderdale, Florida--(Newsfile Corp. - March 2, 2024) - In a groundbreaking move towards convenience and efficiency, Keyzoo, a pioneering platform in the locksmith industry, announces the launch of its innovative online ordering system for car keys.

    Key Points: 
    • Fort Lauderdale, Florida--(Newsfile Corp. - March 2, 2024) - In a groundbreaking move towards convenience and efficiency, Keyzoo, a pioneering platform in the locksmith industry, announces the launch of its innovative online ordering system for car keys.
    • With the rise of digital solutions, Keyzoo introduces a seamless online platform where customers can effortlessly order their car keys from the comfort of their homes.
    • "At Keyzoo, we are dedicated to revolutionizing the way people access car key services," says Eli Itzhaki, Founder of Keyzoo.
    • With a commitment to customer satisfaction and reliability, Keyzoo stands as a trusted partner in the realm of car key solutions.

    Dr. Honig Joins Legacy as Strategic Advisor, Bringing Expertise in Male Reproductive Health and Urology

    Retrieved on: 
    Tuesday, March 5, 2024
    SSMR, Division, Research, Reproductive medicine, Freezing, Harvard University, Society, Health, Patient, Website, Yale School of Medicine, Birth control

    NEW YORK, March 5, 2024 /PRNewswire/ -- Legacy, the leading provider of at-home sperm testing and freezing solutions in the United States, proudly announces the appointment of Dr. Honig, a distinguished Professor of Urology and Division Chief of Sexual and Reproductive Medicine at Yale University School of Medicine, as a Strategic Advisor.

    Key Points: 
    • Dr. Honig's extensive expertise in male reproductive health and urology will significantly enhance Legacy's commitment to innovation in the field of male fertility care.
    • With a remarkable background in academia and clinical practice, Dr. Honig brings a wealth of experience to his new role at Legacy.
    • "The company's commitment to advancing male fertility care aligns with my passion for enhancing access to comprehensive reproductive health services.
    • In his role as a Strategic Advisor, Dr. Honig will provide valuable guidance and strategic vision to further propel Legacy's mission of revolutionizing male fertility care.

    Explore a New Way with ENGWE's Latest Launch: L20 2.0, Bringing ultimate performance with a highly competitive price

    Retrieved on: 
    Thursday, February 29, 2024
    L20, Transport, Female, Website, Torque, Peak power

    Committed to revolutionizing short trips and enabling riders to explore new horizons, ENGWE has perfected the blend of power, convenience, and affordability in the L20 2.0.

    Key Points: 
    • Committed to revolutionizing short trips and enabling riders to explore new horizons, ENGWE has perfected the blend of power, convenience, and affordability in the L20 2.0.
    • To celebrate the launch of the ENGWE L20 2.0 e-Bike , ENGWE is offering an exclusive promotion from March 1st to March 31st, 2024.
    • Additionally, ENGWE will be giving away 50 special gifts, including 5 units of the ENGWE L20 2.0, to lucky participants.
    • ENGWE L20 2.0 ebike Product Highlights:
      Affordable Luxury: Priced under $1000, with an early-bird offer of just $799, the ENGWE L20 2.0 sets a new standard for cost-effective e-bikes without compromising on quality or performance.

    Certify Health to Showcase Innovative Healthcare Solutions at ViVE Conference in Los Angeles

    Retrieved on: 
    Thursday, February 22, 2024
    Artificial intelligence, Telehealth, Health, Business development, Conference, ViVe, Patient, Website, Partnership, Nursing

    As a prominent player in the digital health industry, Certify Health is excited to showcase its innovative healthcare solutions and contribute to the ongoing dialogue surrounding the future of healthcare delivery.

    Key Points: 
    • As a prominent player in the digital health industry, Certify Health is excited to showcase its innovative healthcare solutions and contribute to the ongoing dialogue surrounding the future of healthcare delivery.
    • At the ViVE Conference, Certify Health will highlight its cutting-edge healthcare technology solutions designed to address the evolving needs of healthcare providers and patients.
    • "We are thrilled to participate in the ViVE Conference and showcase our innovative healthcare solutions," said Jeremy Hummer, Certify Health's VP of Business Development.
    • For more information about Certify Health and its healthcare technology solutions, visit Certify Health's Website or contact Certify Health's Contact Information.

    New digital benchmarking research identifies Citi, Chase, Bank of America and U.S. Bank as top for credit card digital experience

    Retrieved on: 
    Wednesday, February 21, 2024
    Generation, Research, Bank, Chase, Navigation, Mobile app, Citigroup, Credit card, Website, Bank of America, Online shopping

    The research finds that websites generally outscore mobile apps in terms of functionality, with many apps underperforming in key areas like account information, rewards and support.

    Key Points: 
    • The research finds that websites generally outscore mobile apps in terms of functionality, with many apps underperforming in key areas like account information, rewards and support.
    • "In a very competitive field, Citi is the leader in website experience, with Bank of America and Chase taking second and third, respectively," says Olivia Jack, Credit Card Research Manager at Corporate Insight.
    • As part of the Credit Card Experience Benchmarks, CI surveyed over 3,300 consumers in October 2023 to understand how they use card digital platforms.
    • "Card mobile apps often lack capabilities that are available on desktop sites," says Julianna Sansevero, Senior Analyst at Corporate Insight.

    Professor Dr. Michael Eisenberg Joins Legacy as their newest Strategic Advisor

    Retrieved on: 
    Wednesday, February 21, 2024
    Research, Harvard University, Fertility, Freezing, Stanford University, Roman, Health, Patient, Male, Website, Birth control

    NEW YORK, Feb. 21, 2024 /PRNewswire/ -- Legacy, the leading sperm company in the United States, is honored to announce that Dr. Michael Eisenberg, a distinguished Professor at Stanford University, has joined the company as a Strategic Advisor.

    Key Points: 
    • Legacy, The Sperm Company, brings on Dr. Eisenberg to help further enrich and develop accessible sperm care and male fertility options.
    • "I am excited to join Legacy as a Strategic Advisor," Dr. Eisenberg recently shared "The company's dedication to advancing male fertility care aligns with my passion for making male healthcare more accessible.
    • In his role as a Strategic Advisor, Dr. Eisenberg will provide valuable guidance to Legacy's mission of advancing male fertility care.
    • "We are thrilled to welcome Dr. Michael Eisenberg as a Strategic Advisor.

    Veteran Real Estate Investor Gives BAM Capital Glowing Review

    Retrieved on: 
    Tuesday, February 20, 2024
    Acquisition, Website, Trust, Professional, Press release, Partnership, Commercial property

    CARMEL, Ind., Feb. 20, 2024 /PRNewswire/ -- Veteran real estate investor Dave L has publicly endorsed BAM Capital, highlighting the firm's expertise and security in managing investment funds.

    Key Points: 
    • CARMEL, Ind., Feb. 20, 2024 /PRNewswire/ -- Veteran real estate investor Dave L has publicly endorsed BAM Capital, highlighting the firm's expertise and security in managing investment funds.
    • With over 25 years of experience in real estate investment, Dave's transition to BAM Capital showcases the trust and confidence he places in their team's capabilities.
    • For more positive reviews on BAM Capital, see the previous Press Release, " BAM Capital Earns Glowing Testimonial From Accredited Investor ."
    • "This endorsement from a real estate investor of Dave's caliber is a testament to the strength and reliability of BAM Capital's investment strategies," stated a BAM Capital representative.