This paper seeks to understand and explore the relationship between credit rating agencies (CRAs) and English housing associations (HAs) in the years since the 2007-8 global financial crisis. We frame this relationship in terms of the multi-faceted process of financialization, whereby the expanded role and power of financial markets, actors and imperatives transforms society. Research on the financialization of housing has addressed a number of aspects including the role of private equity firms, government policy, credit scoring, securitization and the use of derivatives by social housing providers. This paper builds on that literature by examining how reductions in government grant has led English housing associations to become actors in the corporate bond market.
Despite being implicated in the global financial crisis, little academic research has addressed how CRAs operate in general; and specifically their impact on organizations that have social missions and are not entirely profit-driven. Alongside other evidence, CRAs use accounting information to calculate performance criteria, when deciding on credit ratings.
This exploratory study draws on semi-structured interviews with senior finance officers in large London housing associations to explore how CRA methodology (performance criteria) have been internalised and, if (or how) these criteria have contributed to changes in the strategic and operational activities of the HAs. Initial data analysis indicates an awareness among HAs of tensions between engaging with CRAs, their organisational structures and pursuing their strategic aims and objectives.
More broadly, the study highlights the dual nature of the CRAs who act both as a gatekeeper to the financial markets but also a gate-opener for the financial markets into new arenas (i.e. social housing providers). In the process, this paper highlights the under-researched topic of CRA activity (including their reliance on accounting information) and contributes to the debates about the nature and practice of financialization, specifically in relation to social housing.
G1 - Accounting and Accountability – Constructing society – History, culture, politics and
