Rating effectiveness and regulation.

Summary The issue of the efficiency of rating and the methods of regulation of this industry is only gradually established because of the multiple interactions existing between these two research axes. The reliability of rating as a whole is addressed by examining its definition, its determination process, its methodologies and its criteria, through the prism of the three dominant rating agencies. The factors that explain default risk and recovery rates are investigated from this perspective (part 1). Then, since rating has become a tool for regulating financial systems, particularly in the United States with the "NRSRO" qualification, it is appropriate to question the consequences of this movement, likely to generate adverse effects on the rating industry. Indeed, the nature of rating would be modified and barriers to entry into the rating market created, due to this employment and inadequate qualification, which does not necessarily favour the distinction of reliable and credible agencies (Part II). The lessons learned, essentially from the American experience, allow us to appreciate the problems posed by Basel II. The two proposed approaches to credit risk offer distinct characteristics in terms of predictive capacity for default. The ECAI qualification does not appear efficient. In this perspective, a regulatory scheme is put forward, intended to contribute to the reflections conducted by the supervisory authorities, based on the objective evaluation of the reliability and credibility of the rating agencies (part III).