Multiple credit ratings and liquidity creation

Kladakis, George; Chen, Lei; Bellos, Sotirios K.

Abstract

We examine the relationship between multiple credit rating purchases by banks and liquidity creation using a diverse sample of 486 banks from 71 countries. We show that liquidity creation is negatively associated with the number of ratings purchased by the bank, and that capital can positively moderate this relationship, allowing banks that obtain more ratings to create more liquidity.

Citation

Kladakis, G., Chen, L., & Bellos, S. K. (2022). Multiple credit ratings and liquidity creation. Finance Research Letters, 46(A), Article 102313. https://doi.org/10.1016/j.frl.2021.102313

• Journal Article Type: Article
• Acceptance Date: Jul 12, 2021
• Online Publication Date: Jul 14, 2021
• Publication Date: 2022-05
• Deposit Date: Nov 2, 2021
• Journal: Finance Research Letters
• Print ISSN: 1544-6123
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 46
• Issue: A
• Article Number: 102313
• DOI: https://doi.org/10.1016/j.frl.2021.102313
• Keywords: Banks, Rating agencies, Multiple credit ratings, Liquidity creation
• Public URL: http://researchrepository.napier.ac.uk/Output/2817703