Understanding the Disciplinary Aspects of Neoliberal Regulations: The Case of Credit-Risk Regulation Under the Basel Accords.

The rise of risk-based regulations, which has accompanied the risk management explosion, is presented in the literature as a “managerial turn” in regulation, reflecting a shift from a “command-and-control” logic of regulation towards a "softer" and "more cooperative" neoliberal logic of regulation, which is focused on the control of self-regulation (Power, 2007). The existing literature also emphasizes the shift, within risk management norms and standards, from “risk quantification” towards “risk governance”. By analysing one of the main, and paradoxically one of the less studied aspects of the Basel framework for capital requirements, its requirements regarding credit risk, our paper partly challenges these results.

The 2004 reform of the Basel Agreements (Basel II) is usually presented as one of the most typical examples of the development of risk-based regulations. Confronting the discourses accompanying this reform to an in-depth analysis of the technical provisions for credit risk regulation, we show that, if the reform was indeed driven by a neoliberal political agenda, it counter-intuitively resulted in a significant development of intrusive disciplinary processes for banks and their credit management processes. Moreover, in our case study, changes in risk governance and management processes appear intrinsically linked with the implementation, in the regulation, of a very specific and highly disciplinarizing "risk-measurement" programme.

Drawing on Foucault (2008) analyses on neoliberalism, the paper suggests that the presence of disciplinary aspects in this risk-based regulation should not necessarily be regarded as a "pathological drift" or as a "subversion" of its initial liberal programme and that it can rather be interpreted as both liberalism’s other face and its very condition. Methodologically, this study also underlines the value of approaching risk management issues by an in-depth analysis of their technical specifications, since this approach enables us to construct the contrasting image of the changes presented here, and consequently to highlight the strong disciplinary processes embedded in this neoliberal-inspired reform and their structuring effects on management accounting and control processes.