Replicating Agency Ratings through Multinomial Scoring Models

In a time of numerous corporate failures, companies need to be increasingly certain that they are minimising their risk and managing their exposures (such as corporate lending) correctly. This title comprises critical analysis and discussion on the methodologies used and implemented by, not only the major rating agencies, who are involved in producing public ratings, but also those rating systems used internally by institutions. This title brings together views from the ratings agencies themselves, the founders of different rating systems, credit practitioners involved in implementing their own internal rating systems and those who represent the regulatory bodies that are monitoring ratings processes. Additionally, this book offers insight on corporate failures - such as Enron - in relation to how different aspects of rating and scoring systems may be flawed. The reader is also provided with background information on the Basel Committee's "Internal Ratings Based Approach" that they should be aware of when implementing their own internal ratings systems.