Abstract
During the recent European debt crisis, credit rating agencies (CRAs) and the ratings they were producing became a frequent bone of contention. We analyze which factors are considered by CRAs when they judge a state's credibility in implementing an announced austerity program. The results of a fuzzy-set Qualitative Comparative Analysis of credit ratings show that implementation-related factors had a comparatively minor impact while the level of economic competitiveness of the evaluated country displayed high explanatory power. The findings highlight the desolate implications for less competitive countries that emanate from credit ratings and their influence on refinancing costs. While competitive states are deemed better able to generate future growth and therefore get positive evaluations, less competitive states cannot prevent (further) downgrades in the short- or middle-term by announcing austerity programs.