News

Research into effective regulation of credit rating agencies is awarded research grant

Research into effective regulation of credit rating agencies is awarded research grant

A research project at Rotterdam School of Management, Erasmus University (RSM) investigating effective regulation of credit rating agencies, has been awarded an NWO Veni grant.

Dr Dion Bongaerts, associate professor of finance at RSM, will receive a Veni grant of €250,000 for his research on credit rating agencies (CRAs) from the Netherlands Organisation for Scientific Research (NWO). Dr Bongaerts earned his PhD in 2010, and has previously worked as a risk manager for an international bank. His research will focus on the design of effective regulation of CRAs, and on the effect that political opportunism may have on the process of designing such regulation.

Dr Bongaerts research into CRAs has been motivated by the role played by CRAs such as Moody’s and S&P in recent financial crises. During the sub-prime crisis, ratings on complex mortgages products issued by CRAs turned out to be too optimistic. In combination with anecdotes about misconduct within CRAs, the dramatic performance of ratings on these products has led to several proposals to regulate CRAs more tightly.

Yet, there is substantial disagreement as to which regulation would be effective. For example, would more competition among CRAs be beneficial or damaging from a social point of view? Moreover, politicians may use the discussion about CRA regulation to put pressure on CRAs not to downgrade their government debt. This can lead to a loss of confidence in government debt markets because investors may interpret such actions as political reluctance to take painful but necessary measures.

Dr Bongaerts has a proven track record in research about credit markets. His work has been presented at major conferences around the world and his articles have been published in top tier academic journals including the Journal of Finance. He holds a PhD degree in Finance from the University of Amsterdam, an MSc in Econometrics from Maastricht University and has been a visiting scholar at Yale School of Management. He has several years of professional working experience as a quantitative risk manager at ABN-AMRO bank.

About NWO: The Netherlands Organisation for Scientific Research is the largest financer of scientific innovation in the Netherlands and operates as an intermediary between researchers, international science centres and society. Its Veni grant scheme provides funding to young researchers who have recently earned doctorates and who are conducting thought-provoking and cutting-edge research. The grants can be used to carry out research over a three-year period.

About RSM: Rotterdam School of Management, Erasmus University is consistently ranked amongst the top 10 business schools in Europe. It is located in the international port city of Rotterdam where core Dutch values of openness, flexibility and acceptance of diversity have attracted businesses on a global scale. Our emphasis is on ground breaking research and practices relevant to business; our primary focus is on developing business leaders who carry their innovative ideas into a sustainable future. Our portfolio includes a broad array of bachelor, master, doctoral, MBA and executive education programmes.

For more information on this release, please contact Marianne Schouten, Media & Public Relations Manager for RSM, on +31 10 408 2877 or by email at mschouten@rsm.nl.