Rating Agencies: Originator, Accelerant or Simply Dragged Into the Sovereign Debt Crisis?

Rating agencies transform data on the political, economic and financial situation of a country into a simple signal for investors. In doing so, they facilitate primarily cross-border investment. Some empirical studies have pinpointed ratings as a cause for the widening interest gap compared to a country that offers safe investment opportunities. Other empirical studies, on the other hand, found a non-linear link between fundamental data on the fiscal position of a country and its interest rate gap vis-à-vis a country with safe investment opportunities.