Paper Title
Access to Capital Enhancement by Informative Credit Ratings

Abstract
This study examines whether a rating contingent or performance contingent contract can better offset credit rating agencies (CRAs)' biased ratings and improve access to capital. CRAs' conduct of rating inflation and deflation are considered in the model. CRA can privately set effort-exertion levels and rating disclosure rules. The CRA under the rating contingency contract may inflate ratings. However, the performance contingent contract can better motivate the CRA to produce informative ratings. Accurate ratings can help small- and medium-sized enterprises (SMEs) and microfinance institutions (MFIs) efficiently access funding, promoting financial development. Keywords - Asymmetric Information, Compensation Schemes, Rating Inflation Regime, Rating Deflation Regime