An Evaluation of the Credit Rating Practices in Bangladesh.

Abstract

The concept of Credit Rating and the participation of Credit Rating Agencies (CRA) in the capital market of Bangladesh are in elementary stage. But the role it can play is no way questionable though a widespread criticism exits regarding their practices like corporate governance practices, potential conflicts of interest, alleged anticompetitive or unfair practices and diligence and competence. This paper focuses on two questions. First, to what extent does empirical evidence supports the criticisms? Second, what attempt can address these issues? To fulfill the objectives a close study has been conducted through interview of former & existing financial analysts and responsible officials of the CRAS in Bangladesh. And finally this study reveals the fact that all the mentioned criticisms are most of the cases true because of existing legal environment and lack of monitoring over the CRAS practices by the market regulators.