Market Structure for Credit Rating Industry in China
LI Ming-ming1, QIN Feng-ming2
1.School of Finance, Shandong University of Finance and Economics, Jinan 250014, China; 2.School of Economics, Shandong University, Jinan 250100, China
Abstract：
This paper explores the impact of competition of Chinese credit rating industry on rating accuracy, using bond rating data in China during 2002-2013. We find that credit ratings are lower and the ratings are more likely to be downgraded when competition becomes fiercer. Further, we find that the sensitivity of bond yield spread to ratings becomes larger when competition becomes fiercer. The results in the two aspects indicate that competition improves the rating accuracy, which proves the viewpoint of “competition advantage”. Besides, for non-state-owned companies and companies rated by agencies in better law environment, the effect of competition on rating accuracy is more obvious. The research has certain implications for improving market structure of credit rating industry and increasing capital market efficiency.
2017 
