This study analyzes the determinants of rating changes and the variables' marginal effects on
rating change probabilities. Based on the results it presents transition matrices by computing
transition probabilities. Furthermore this study analyzes subsamples of the data set
conditional on the business cycle and the economic strength of a country by using interaction
effects. The Author of this study thereby verifies whether or how the transition matrices
change by including interaction effects. He applies a latent variable approach using an
ordered probit model to calculate the effects of different variables on the probabilities of
rating changes.
