Date of Award


Degree Type


Degree Name

Doctor of Philosophy (PhD)

Graduate Group


First Advisor

Bilge Yilmaz


The market prices of securities are heavily dependent on their credit ratings, which can in turn influence the issuers' incentives to invest in asset generation, resulting in inefficiencies. We provide a model with a strategic credit rating agency (CRA) and issuers with endogenous set of assets. Specifically, we consider two ways by which issuers generate assets: (1) bundling assets into securities of varying qualities (securitization) (2) investing in projects funded by issuing corporate bonds (investment). We then analyze the equilibrium of these models and derive the conditions under which ratings can result in over or under investments. Next, we perform comparative statics analysis on the impact of market and macro factors on inefficiency by way of influencing credit ratings. Finally, we show that how ratings models with endogenous assets can explain different ratings performances across different asset classes.