World ratings: features of formation and impact on the country’s economic growth

Marina Shmahelska
PhD in Geographic Sciences, Head of Economic Theory, Fundamental and Socio-Humanitarian Disciplines Department, Vinnitsa Cooperative Institute, Ukraine, e-mail: fed.vki@ukr.net, ORCID ID: https://orcid.org/0000-0002-4680-5272

Cite this article:

Shmahelska, M. (2021). World ratings: features of formation and impact on the country’s economic growth [Svitovi reitynhy: osoblyvosti formuvannia ta vplyv na ekonomichne zrostannia krainy], Socio-economic research bulletin, Vìsnik socìal’no-ekonomìčnih doslìdžen’(ISSN 2313-4569), Odessa National Economic University, Odessa, No. 2 (77), pp. 181–192.

Abstract

The article investigates the ratings formation as a special type of activity that is actively implemented in a market economy. The process of creating a rating system is considered. It is established that the analysis results of economic entities activities are expressed as the results of evaluation in the rating scale. The main difference between the concepts of «rating» and «ranking» is determined, which allows building economic entities according to the ranking, that is, according to one of the indicators. The criteria that underlie the classification of ratings are analyzed. It is noted that in the economic literature, in most cases, it is carried out by rating agencies and companies. It is established that the rating process, as a business, has not only a methodological, but also a certain moral component. The regulatory element of rating agencies and features of their national and international rating scales are studied. A set (system) of national rating scales are determined, which provides the most complete and objective assessment of the issuer’s creditworthiness. The ratings of international rating agencies, which are assigned, usually, on two scales: international and national, are studied. It has been proven that changes in ratings play an important role for transactions with interest rate risks, as information for investors in decision making. The main methods of rating are established, which are largely closed. The leading credit ratings of international agencies, which are used by portfolio investors in decisionmaking, including country and regional ratings, are named. The main advantages that provide credibility to the ratings are substantiated, such as: the agency’s reputation; the agency has a generally recognized and accessible reporting methodology; differences in approaches to the analysis of rating subjects.

Keywords

international ratings; rankings; rating agencies; credit rating; Moody’s Investors Service; Standard & Poor’s; Fitch.

JEL classification: F550; F630; О190; DOI: https://doi.org/10.33987/vsed.2(77).2021.181–192

UD classification: 339.9:330.354

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