Study On Improving The Regulatory System Of Credit Rating In China

Credit rating plays an important role in the capitals market, which provides information for investors in investing decisions, acts as the gatekeeper in security issue and supplies risk warnings in way of degrading rates when risk condition deteriorates. In subprime crisis, the credit rating institutions give a high rate to the high risk structured financial products and fail to adjust the credit level after the risks arise, so that mislead the investors and propel the subprime crisis. In need of unified management of security market, the credit rating system in China was established during 1980s. With a late starting, the regulatory system of credit rating is not sound, and the market access system, the interests'conflict prevention mechanism and information disclosure system have defects. With the appearance of innovation financial products such as structured financial products, improving the regulatory system of credit rating is of great significance in preventing the credit rating problems exposed in subprime crisis. This paper analyses the defects in credit rating regulatory system in subprime crisis, introduces the reform trend of credit rating regulatory system in America, France, the European Union and International Securities Regulatory Commission, and at the end offers proposals in improving the credit rating regulatory system at both macro and micro level.This article includes introduction, body and conclusion, in which the body has four chapters:Chapter I introduces the concept of credit rating and defines the study range of the paper within securities credit rating. It introduces the emergence of credit rating and its developing process during which the regulation depends on credit rating, and concludes that regulation dependence intensifies the dependence of investors on credit rating, and then analyses the status and function of credit rating in investor'protecting system, and finally introduces the regulation situation of credit rating.Chapter II raises four defects existing in credit rating regulatory system associated with the acts of credit rating institutions in American subprime crisis, including failure in effective prevention of interest conflicts, inadequate information disclosure, unbalance between rights and responsibilities and the limitation of protecting the investors.Chapter III is the description of credit regulation reforms in America and other countries and organizations after the subprime crisis. It emphasizes on the solution of defects in credit rating regulatory system by American regulatory authorities, and puts forward the avoidance of unbalance between rights and responsibilities of the solution scheme thereto suggests the solution of the writer based on the saluting advices by theorists.The first three chapters enlighten the ways of improving the credit rating regulatory system in China. Chapter IV narrates the introduction and development of credit rating in China and analyses the existing problems in credit rating regulatory system in perspective of legal demonstration. It stresses the defects in the market access system, the interests'conflict prevention mechanism and information disclosure system. Associated with American credit rating regulatory process, defects in credit rating regulatory system in subprime crisis and reform schemes in different countries, the paper brings forward three relationships that have to be dealt with during the process of improving credit rating regulatory system in China and specified system solutions.