“…Similar to Morrison and White (2004), Marshall and Venkatamaran (1999) and Dangl and Lehar (2002) argue that the benefit from internal rating depends on the regulator's monitoring quality and punishment potential. Gersbach and Wehrspohn (2001) argue that banks will underinvest in their scoring models because they will identify bad loans more often, which leads to higher capital adequacy ratios with internal rating, but they do not consider that credit risks may be opportunistically misstated.…”