The business of credit ratings began in the US in the early 1900s. Over time, credit ratings have gradually taken on an expanding role, both in the US and abroad and in official financial market regulation as well as in private capital market decisions. However, in 1999 the Bank for International Settlements (through its Committee on Banking Supervision) proposed rule changes that would provide an explicit role for credit ratings in determining a bank's required regulatory risk capital. Once implemented, this BIS proposal (often referred to as Basel 2) would vastly elevate the importance of credit ratings by linking the required measure of bank capital to the credit rating of the bank's obligors. The title brings together the research of economists at New York University and the University of Maryland, along with those from the private sector, government bodies, and other universities. It begins by focusing on the historical origins of the credit rating business and its contemporary industrial organization structure, then presents several empirical studies crafted largely around individual firm-level or bank-level data. These studies examine: the relationship between ratings and the default and recovery experience of corporate borrowers; the comparability of credit ratings made by domestic and foreign rating agencies; and the usefulness of financial market indicators for rating banks, among other topics. In the third section, the record of sovereign credit ratings in predicting financial crises and the reaction of financial markets to changes in credit ratings is examined. The final section of the volume emphasizes policy issues facing regulators and credit rating agencies.