Assesments of objectivity of credt rating organizations: Comparative analysis of credit ratings and Turkey and the BRIC countries

Along with the liberalization; the fact that capital desires to turn to profitable and safe investments, increase in the diversity of financial instruments, the gradual loss of transparency of capital markets as well as the fund needs of countries and companies have brought credit rating agencies to a key point. Rating agencies provide investors with information that will eliminate uncertainty by measuring the risk-return of investors. Since investors tend towards rated financial instruments that they consider as safe ports, countries and companies request to be rated from rating companies to attract funds from these investors. The need for these institutions playing a critical role in the functioning of the global economy to make an independent and impartial rating is of paramount importance in terms of earnings, cost and reputation of companies and investors; as the rating influences the borrowing costs of countries and companies. In this study, information on important credit rating agencies has been presented; in addition, the historical development of credit rating agencies has been discussed along with credit rating methods and sample applications. After the economic crises of the countries and company bankruptcies, which the rating agencies has not managed to foresee; the objectivity of these institutions in question has been open to dispute. In particular, with the financial crisis in 2008 and Lehman Brothers incident, the objectivity of these institutions came under harsh criticism throughout the world. In this respect, Turkey's political, economic and financial indicators along with those of BRIC counties have been revealed and combined score has been found based on PRS-ICRG method. Then, the rating score that the rating agency of Moody’s has given to these countries and the combined scores of countries have been compared.