It is interesting to observe the operations of commercial banks with special emphasis on the ways and means that are put in place to deal with risks that may arise. In this chapter, the researcher will take a look at the kind of regulatory environment that has been internationally proposed for banks and the kind of changes that have happened over time. The researcher will start by addressing the reasons that attributed the international banking body to decide to make regulatory standards for all banks. Under the same section, the researcher will deal with an overview of the three standards that have been proposed over time. The first will be the be the Basel I then followed by Basel II and lastly the researcher will focus on Basel III and the underlying challenges, if any, that need to be addressed in future proposals that will be a base for this researcher’s proposal for a new rating system specifically designed to address issues in Lebanon banks. This researcher believes that the internationally set rating system does not allow better ratings for banks in regions that have political instability even if the banks have the capability of performing better than in other regions that have political stability.
In part two of this research, there will be focus on credit rating and models including the rating systems, and the private rating agencies and the models that they use in their gradation. There will also be focus on the private rating agencies and their adoption of the Basel recommendations and requirements in rating of commercial banks. This is the same part that the researcher will look at the origin of rating of commercial banks in Middle East and Lebanon in particular. The reasons leading to low gradation of...
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Novembre, V. (2009). The bargaining process as a variable to explaining implementation choices of international soft-law agreements: The Basel case study, Journal of Banking regulations 10, 128-152. DOI: 10.1057/jbr.2008.23
Pasiouras, F., Gaganis, C., & Doumpos, M. (2007). A Multicriteria discrimination approach for the credit rating of Asian banks, Annals of Finance 3, 351-367. DOI: 10.1007/s10436-006-0052-0
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Smith, R. C., & Walter, I. (2002). Rating Agencies: Is there an agency conflict? 1-59.
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