Until recently, financial stability ratingsand creditworthiness were used only as tools of work of participants in the stock markets. Now the situation has changed. The activities of rating agencies covered a much larger area, helping the mass consumer make the right choice in favor of a particular bank or insurance company. But this is what an ordinary citizen needs. That is why it is worthwhile to understand what ratings are. And it's worth starting with their appearance.
In general, this system was first usedmore than a century ago. In the late nineteenth century, the US began to use the ratings of financial stability and creditworthiness. Initially, they were only given to bond issuers, and they served as a tool for professionals who traded in stock markets. And only twenty years ago they stopped using this indicator as a regulatory lever for assessing creditworthiness. If we talk about what ratings are, then it should be noted that until recently they were not used as one of the characteristics for choosing a suitable bank, insurance or credit organization. In the world, this system was not used, because it was quite difficult for ordinary citizens to understand, because of what was not in demand.
Now many may wonder whatis the rating of banks. Indeed, recently it is used to determine the financial sustainability of institutions, as well as to understand what companies and structures are worth working for the population, small and medium-sized businesses. That is why the role of ratings has recently become very significant, and they are now being used more and more actively.
Use in everyday life
Now, with the question of what isratings, everything has become more or less clear, it is necessary to touch on the moments associated with their use in everyday life. And then they are useful to understand what business can be called more stable, and also reliable, to determine whether it is worth working with some specific insurance companies and other financial institutions.
So, what are ratings, you already understood, nowyou can go to the relevant points. The first is very important, as it concerns the financial stability ratings assigned by specialized agencies. In general, the analysis received from financial advisers and market analysts relates to the assessment of the quality of services provided. It turns out that the use of financial stability ratings is not related to the assessment of the bank itself, the service, the insurance company, the convenience of working with a financial institution or a management company. It is only an assessment of the very position of the organization itself.
What is the rating of banks?
This parameter in the description of the financial institution canused to understand whether it is reliable or not. That is, to determine the probability of the bank or insurance company performing its immediate obligations to the client. However, the rating does not give an answer to the question of whether it will be convenient for you to work with an institution, how good and comfortable it is to use its website, how many offices it has, where you can apply at any time to receive all the necessary information or services.
Use in other situations
If we are talking about an insurance company, then here toosuch a parameter as a high rating is not indicative. It does not make it clear how the company works with its clients, whether it is suing them for payments, which is now very common practice.
That is why the use of ratings can notcall the only tool for choosing an insurance company or bank. It is necessary to pay attention to the list of services provided, the usability of the service through the site, the convenience of using offices, the number of negative and positive reviews about this organization. So, if we talk about what ratings are, then they can be called only one tool that is required to make the right choice, to cut off the least reliable banks and insurance companies, and also to work with more stable financial institutions.
In Russia in recent years, many banks andinsurance companies remained without licenses and went bankrupt because of the situation. The financial sector experienced a very difficult economic crisis, and some large structures even remained without licenses. This is what it says about the need to be very careful about choosing banks and insurance companies that you can trust. As a rule, institutions that lost their licenses and went bankrupt had a rather low rating, but not all. There are examples of how banks with sufficiently high indicators of financial stability experienced significant problems, which is why they went bankrupt. And then you can not talk about the error committed by specialized agencies. Their assessment is a characteristic of the probability of bankruptcy or some financial problems.
The same can be said, in response to a question aboutWhat is a personal rating? It is made up for individuals whose activities can influence the work of others. For example, the rating of traders on the stock exchange is formed, showing who and how it works. This indicator is not a guarantee that all will continue to be at the same level, but gives an idea of the method and principle of activity.
How are financial stability ratings determined?
This question can be discussed in more detail. It is important to determine what it is, and also how the agencies that make up the ratings calculate their indicators, assigning certain points to insurance companies, banks, and other financial institutions.
So, if the meaning of the word "rating" has becomeit is clear that it is worth considering it in the context related to financial institutions. Under this indicator lies the estimation of the probability of bankruptcy. If to say in plain language, then he speaks about the possibility of a bank or an insurance company not to fulfill obligations to customers, investors, creditors, and also insured persons. There is also a more complex definition, but in this case it is quite possible to say that the probability of such a situation is the main and most important point.
Ratings in other areas
As practice shows, the use of suchThe rating parameter is relevant not only in the financial sphere, but also in the gaming one. So, it is worth to say that such rating in WoT. In the game of World of Tanks, which has become very popular recently, an evaluation system is used, showing how successful each of the gamers is. However, now many people have a question about what the WN6 rating is. The formula of this indicator uses the number of frags, the damage done, and other characteristics give a small percentage. This rating can not be wound like the old one, as here the base capture points and other insignificant moments are not taken into account, which allows a more qualitative assessment of the player's abilities.
As you can see, recently the rating system of evaluation is becoming more and more popular in all spheres of life.