A critical view to credit rating agencies in the financial crisis: Loss of confidence and new regulations

The importance of credit rating is significant for investors who want to tend towards credible investments and for countries and companies which want to attract foreign capital through different debt instruments, in global finance system. It is argued that credit rating agencies, which are the center of the criticisms because of high credit ratings that they gave very shortly before the bankruptcy of big companies like Enron, Parmalat and Worldcom, have played an active role in financial crisis in 2008. The main subject of this thesis is examining the role of credit rating agencies, whose credibility is questioned, in crises period in a critical way and evaluating the regulations which have been done pre, throughout and post crises. In this thesis, it is aimed to identify the deficient side of the regulations and make suggestions towards them. In addition, it is prepared a "thesis vocabulary" for students who have interest in finance industry to increase their awareness towards financial concepts and institutions. As a result of the thesis, it is founded that credit rating agencies have triggered the crises and even have made them deep through exaggerating ratings and it is determined that credit rating agencies have not offered radical solutions to chronic problems like fee charging policy and oligopolistic structure which are considered in criticized issues. Keywords: Credit Rating Agencies, Financial Crisis, Credibility, Thesis Vocabulary.