Because Rating Agencies Often Lag Rather Than Lead the Business

question 45

Short Answer

Because rating agencies often lag rather than lead the business cycle, risk weights based on a loan's credit rating may not accurately measure the relative risk exposure of individual borrowers.

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Definitions:

Revitalization Movements

Social movements aimed at renewing, rejuvenating, and inspiring a community or society, often in the context of religion or cultural identity.

Haitian Vodou

A syncretic religion that combines elements of West African, Catholic, and Native American traditions, practiced predominantly in Haiti.

Syncretic Religious System

A religious or belief system that combines elements from different religious traditions and practices.

Industrial Societies

Societies in which human labor, hand tools, and animal power are largely replaced by machines, with an economy primarily based on mass production in large factories.