Critically analyses the reasons for split ratings across rating agencies and the effects of split ratings on financial markets’ prices and agencies’ rating dynamics. Support your argument with examples and evidence from recent literature.

The rating methodologies in the credit rating agencies could be measured in the different rating scales which are used with the access of various data which is used in evaluating the information. There are multiple reasons which are given in the splitting the rating agencies:

·         The rating method and principles followed by the agencies may differ

·         They may have different access of the information

·         It must be written with different interpretation in different ways

·         The opinion about different issues which create biasness

Effects of split rating

·         Preference to agencies: companies and institute will prefer to get the services of agencies to get rate to them.

·         It plays a great role in the investment decision making which is used to increase yield per capital.

·         It plays an important role in the calculation of the banks interest which can lead a company to success.

·         It increases the investment in the community to avoid the confusion.