The impact of financial ratings on bank governance: A theoretical literature review

L'impact de la notation financière sur la gouvernance bancaire: Une revue de la littérature théorique

Tarik Jellouli and Hamza Ousi Moh ()
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Tarik Jellouli: USMBA - Université Sidi Mohamed Ben Abdellah
Hamza Ousi Moh: USMBA - Université Sidi Mohamed Ben Abdellah

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Abstract: During the subprime crisis, rating agencies, once considered essential to financial transparency, were the subject of much criticism and scrutiny of their methods, along with other financial standards. In the banking sector, governance is strongly influenced by regulatory frameworks such as the Basel Committee's agreements on banking supervision (Basel II and, above all, Basel III), with a particular focus on risk management and compliance. This compliance-focused governance coexists with performance objectives, relying on both internal mechanisms (boards of directors, incentive mechanisms, etc.) and external controls (regulation, supervision, etc.) to guide and control management. Financial rating plays a central role in the financial system by assessing the creditworthiness of issuers. Carried out by agencies such as Standard & Poor's, Moody's, and Fitch Ratings, this process contributes to informed investment decisions and financial stability. Our scientific article offers a review of the theoretical literature analyzing the interactions between financial rating and bank governance. Drawing on contributions from information efficiency theory and neo-institutional theory,the study aims to understand how financial ratings can influence and reflect governance practices in the banking sector.

Keywords: The neo-institutional theory; The theory of the informational efficiency of the market; Rating agencies; Bank governance; Financial ratings; La gouvernance bancaire; La notation financière; La théorie néo-institutionnelle; La théorie de l'efficience informationnelle des marchés financiers; Les agences de notation (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-his
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Published in Management Control, Auditing and Finance Review , 2025, 02 (04), ⟨10.5281/zenodo.18484787⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05649266

DOI: 10.5281/zenodo.18484787

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