Regulation Of Chinese Credit Rating Agencies After The Financial Crisis

The subprime mortgages crisis happened in 2007 and the following sovereign debt crisis in Europe have greatly shocked the global finance market. Many huge financial institutions bankrupted, even the Republic of Iceland faced the crash once. The wealth of investors had gone overnight, including those sophisticated institutional investors. But when we are looking back the birth and booming of the subprime mortgage security, credit rating agency (CRA) played a very meaningful role. CRAs also could be found in the earlier finance crises, including the Enron case, the Worldcom case and the Asian finance crisis etc. Maybe it's not the agencies that induced these crises, but at least they pushed. What surprised us is that CRAs haven't changed themselves through these crises and they were acting the same in all these crises. What shocked us more is that the supervision institutions have done nothing but leave the agencies making mistakes one after another.Credit rating agencies have made some contributions for the financial market, and helped many medium and small investors to participant in the market after the 20th century. With the development of financial products, credit rating agencies eliminates asymmetric information as well as the disasters. But these kinds of crises are being indulged, the failure of self-regulatory mechanism and supervisions left CRAs remaining themselves largely unregulated. Serious of remedies didn't achieve as we can see from the America. To credit rating agencies, the regulatory environment is too loose. Frankly speaking, we must make progress in finding some effective ways to supervise agencies, thus CRA can truly act as the watchdog in the financial market. This thesis lays on the construction of questioning, analyzing and solutions. On basis of foreign systems and experiences, the thesis provides some legal proposal to perfect our supervision structuring of CRA.The thesis includes four chapters:The first chapter introduces the functions of CRA and the debacle which CRA involved, through analyzing previous financial crises, discusses the role of CRA and why they didn't achieve as a financial intermediary.The second chapter discusses the reasons why CRA didn't do their must-dos, and finds out that such questions can't be solved properly by self-regulatory mechanism.The third chapter chooses mainly used supervision mode, American Style, to finding out that it's not strict enough. After analyzing the chapter shows how to reform the existing supervision mode. The fourth chapter provides localization mode of CRA supervision and suggests the policies of Chinese supervision on CRA, with considering of Chinese condition and credit rating's characters.