Grants

Carnegie Mellon University

To conduct and promote research on the credit rating industry and its regulation

  • Amount $435,689
  • City Pittsburgh, PA
  • Investigator Chester Spatt
  • Year 2011
  • Program Research
  • Sub-program Economics

In July 2010, Carnegie Mellon professor Chester Spatt hosted a Foundation-supported conference on the industrial organization of credit ratings agencies - the industry responsible for evaluating the creditworthiness of financial instruments and products. The 80 conference participants composed a diverse crop of researchers, including economists, industry practitioners, government officials, and international experts. In addition to presentations on a number of important topics, including litigation risk, competition among rating firms, and regulatory challenges associated with securitization, the conference hosted a session on next steps, where attendees voiced enthusiasm for forming a research network, continuing annual conferences, compiling shared data, and increasing interaction with policymakers. Funds from this grant will support a project by Professor Spatt to develop just such an ongoing research network. Additional funds provide continued support for Professor Spatt's own work on developing sophisticated game theoretic models of the credit rating process, with an emphasis on potential biases introduced into the ratings process by the way firms purchase ratings sequentially and then decide which ratings to publish.

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