Rating aggregation flawed, but better than nothing, researchers say

New research finds errors still substantial even after combining ratings

Aggregating credit ratings from different providers might seem a good way to come up with more reliable estimates of default risk, but new analysis suggests it does not work well in practice.

Christoph Lehmann and Daniel Tillich of the Dresden University of Technology in Germany tested the effects of aggregation with a simulated debt market, including 4,000 issuers of differing credit quality and three rating agencies, each using the same internal model but with access to different, overlapping