The comparison of rating scales of russian and foreign agencies for industrial and financial companies

Abstract

The Russian credit rating market is represented by both international and national rating agencies. Between both types of rating agencies there are several different standards with their own methodological features. In a large variety of quantitative researches have been done a little measuring procedures in the differences of credit ratings. According to various methodologies of rating agencies, it is relatively to the creditworthiness of the same issuer is different. The main goal of this paper is to analyze the reasons for these differences. In this paper, it examines the qualitative comparison of the different rating scales and their ratings. The second purpose of the paper was to compare the rating scales of both Russian and foreign rating agencies for various economic objects – financial and non-financial companies. This work represents the results of an empirical study, during which different rating scales were compared to each other based on the mapping method for Russian industrial companies and for financial institutions (banks and insurance companies). It is shown how the ratings of Russian and international agencies are correlated with each other. The paper also presents the results of regression analysis, based on the financial statistics of micro- and macrolevel with comparative estimation of credit ratings of financial institutions for different countries. The qualitative differences and reasons for the discrepancies between these ratings were taken into model assumptions. As a result of this work, it is achieved a table for the different scales of Russian rating agencies.