DP13418 The Private Use of Credit Ratings: Evidence from Investment Mandates

Author(s): Ramin P. Baghai, Bo Becker, Stefan Pitschner
Publication Date: December 2018
Keyword(s): Credit ratings, delegated asset management, financial crisis, investment mandates
JEL(s): G01, G23, G24
Programme Areas: Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13418

Investment mandates are fundamental to the delegation of asset management. Mandates of fixed income mutual funds often use credit ratings to demarcate the investable universe. We examine changes in the use of credit ratings in these mandates since the financial crisis. The use of ratings in mandates has increased from an already high level before the crisis. Fixed income markets' extensive and continued reliance on credit ratings points to a lack of practically useful alternatives.