Assessing competitive conditions in Korea's credit rating industry after the 1997 financial crisis

Abstract

Investigating the market structure of Korea's credit rating industry during the 1990-2007 period, this paper utilizes the Rosse-Panzar methodology to evaluate the Korean government's financial restructuring policy for fostering the competitive condition in the credit rating industry after the 1997 financial crisis. We find that the degree of market competition in the credit rating industry increased after the implementation of the Korean government's financial restructuring policy. Our analysis indicates that after the financial restructuring process the market structure of Korea's credit rating industry became an oligopoly in a contestable market, which is economically equivalent to the structure of perfect competition.