Institutional aspects of the activities of credit rating agencies

Elena Nikolaeva; Sergey Zenov

INSTITUTIONAL ASPECTS OF THE ACTIVITIES OF CREDIT RATING AGENCIES Institutional aspects of the activities of credit rating agencies

АА Аа

Published in Theoretical economics · Issue 2 · Pages 27–37 · Rubric: ACTUAL PROBLEMS OF THEORETICAL ECONOMY

Received: 06.01.2023 Accepted: 14.01.2023 Published: 02.05.2024

Authors

Elena Nikolaeva

ORCID

Sergey Zenov

ORCID

Elena Nikolaeva

Academic degree: doctor of economic sciences

Science rang: docent

FGBOU VPO «Ivanovskiy gosudarstvennyy universitet»

ORCID

Sergey Zenov

Ivanovo State University Ivanovo

ORCID

ABSTRACT

The article analyzes the activities of credit rating agencies in an institutional theoretical aspect within the framework of a methodological approach designated as a synthesis of political economy and institutionalism. This methodological approach has been used for about twenty years in the research of economic phenomena and processes at Ivanovo State University in the tradition of the scientific school of Professor B. D. Babayev. The presented material focuses on institutional economics. Based on the theories that make up the institutional direction of economic theory (theory of contracts, organization, transaction costs, opportunistic behavior, public choice, etc.), the significance and functions performed by rating agencies as an element of the financial market infrastructure are determined. The mechanism by which rating agencies reduce the risks associated with such problems considered within the framework of institutional economics as principal-agent, false choice, unfair (opportunistic) behavior is disclosed. The authors noted that the category of «trust» is one of the key activities of credit rating agencies as an institution. The study revealed that credit rating agencies are financial market institutions, defining the rules of behavior of rated persons. At the same time, the activities of agencies need to be regulated by the state due to the fact that they are quasi-public organizations (this characteristic was obtained by the authors within the framework of a political and economic approach). The functions of credit rating agencies are highlighted, which confirm the close connection of the elements of the market infrastructure with the financial market itself and the inexpediency of its research in isolation from the relevant market. The role and place of rating agencies in servicing the movement of loan capital and the functioning of the stock market are determined.

KEYWORDS

credit rating agencies, institutional approach, institute, principal agent, false choice, unfair behavior, contract, trust, financial market infrastructure

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