During the financial crisis rating agencies were highly criticized, but now they are on the upswing again. The big players’ share prices are rising steadily. According to Jan Pieter Krahnen, Professor of Finance and Director of SAFE, this is mainly due to the increasing relevance of financial products that are issued directly by firms or states. “Rating agencies benefit from a shifting of financial products from the banking sector to capital markets,” Krahnen said to the daily newspaper Süddeutsche Zeitung (20 Feb 2017). In the course of developments like the European capital markets union, banks are losing their role as mediators between creditors and borrowers. As a consequence, product ratings by rating agencies become increasingly important.
Concerns that agencies are not independent or biased in favor of their home countries are not justified, Krahnen believes. Several studies show that “there are no noticeable distortions”. It is too risky for the agencies to lose their reputation, the Professor states.