Documents Besedovsky, Natalia 1 results

"The rise and evolution of financial calculative practices play a central role in financial markets and are an important force in the financialization process. Using the case of Moody's, a major credit rating agency, this article traces a fundamental paradigm shift in rating practices since the late 1980s. These innovations in credit rating were driven by new calculative models, new kinds of analysts (so-called ‘quants'), and an increasingly profit-oriented organizational culture at Moody's, all shaped by an increasingly financialized context. By studying credit rating agencies' historical and current methodological publications and interviewing rating analysts, I show that the rating innovations of the 1980s and 1990s do not simply alter the rating methods or models. More importantly, they entail an entirely different set of epistemological assumptions about the calculability and predictability of the future, representing a fundamental paradigm shift in calculating and defining credit risk. In this framework, risk is not a threat that must be minimized, but a neutral variable that can be calculated, managed and used to generate profits. These structured finance rating practices suggest a high level of control over risk, and imply that knowledge about risk is sufficient to render it unproblematic. This specific culture of credit risk assessment enabled the emergence and exponential growth of structured finance markets, fueling a culture of high-risk investments. This article contributes to the literature on financialization by arguing that financialization occurs both at the level of organizational culture and calculative practices."