An analysis of the determinants of bank ratings: Comparison across ratings agencies

Emawtee Bissoondoyal-Bheenick, Sirimon Treepongkaruna

    Research output: Contribution to journalArticleResearchpeer-review

    14 Citations (Scopus)

    Abstract

    The recent Global Financial Crisis has focused our attention on the integrity of rating agencies. Often condemned for being too slow to act, rating agencies have been blamed during many financial crises. This impression opens some research questions addressed in this paper. What are the determinants of banks ratings? How do they differ across ratings agencies? This paper analyses the quantitative determinants of bank ratings, provided by Standard Poor s, Moody s, and Fitch in the United Kingdom and Australia. The main finding is that quantitative factors that reflect asset quality, liquidity risk, capital adequacy and operating performance are the key determinants of bank ratings across the rating agencies. However, macroeconomic variables and market risk factors do not seem to be contributing factors in explaining bank ratings in either country.
    Original languageEnglish
    Pages (from-to)405 - 424
    Number of pages20
    JournalAustralian Journal of Management
    Volume36
    Issue number3
    DOIs
    Publication statusPublished - 2011

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