Sources of power of the Big Three credit rating agencies in international financial markets
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Akademia Ignatianum w Krakowie
Submission date: 2018-11-30
Final revision date: 2019-03-03
Acceptance date: 2019-07-06
Publication date: 2019-07-24
Corresponding author
Alicja Malewska   

Akademia Ignatianum w Krakowie
JoMS 2019;41(2):157–168
The aim of this study is to describe and analyze the sources of the strong position of the Big Three rating agencies (Moody's, Standard & Poor's, Fitch Ratings) in international financial markets and confront dominant academic views with post-crisis reality.

Material and methods:
System analysis allowed to extract, describe and explain the main sources of power of credit rating agencies. An analysis of US and EU legal acts as well as the theory of transaction costs and information asymmetry was also applied.

Two processes contributed to the creation of an oligopoly in the credit rating market: the effectiveness of rating agencies in the first decades of their existence, which allowed to gain investors’ trust and legal provisions sanctioning the dominance of the three largest entities.

However, the global financial crisis has damaged the agency's reputation and led to major financial market reforms. Despite this, the Big Three maintained its strong position, which can be explained by the profitability of the rules in force for all major market participants.

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