Rating Financialization: The Calculative Practices of Credit Rating Agencies As Drivers of Social Change

Financialization has been described as a macro-process, a general trend of the increasing importance of financial markets, in terms of assets, productivity, and orientation of non-financial firms towards financial concepts and practices. But to fully understand the process of financialization, i.e. the mechanisms that drive the increasing importance of financial markets, we have to broaden our scope and study practices, meanings, and devices that make up finance.

In this article, I focus on the calculative practices of credit rating agencies. By using rating agencies’ methodological publications as well as interviews with rating analysts, I identify two fundamentally different epistemic cultures of rating production that coexist within rating agencies, which I call the diagnostic and the technical approach. I argue that these differences can be traced back to irreconcilable conceptions of credit risk and their corresponding normative implications: the risk-as-danger and the risk-as-opportunity conception, the latter being inherently tied to the financial logic. By tracing these two epistemic cultures back historically, I show that there has been a shift towards a the technical approach and the conception of risk-as-opportunity within rating agencies, which contributed to the expansion of the financial logic. The argument of this paper is therefore that the evolving calculative practices of risk assessments are a concrete and specific mechanism that drives the process of financialization.