Download or read book Effects of the New Basel Capital Accord on Bank Capital Requirement for SMEs written by Edward I. Altman and published by . This book was released on 2008 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using data from three countries (US, Italy and Australia) and surveying related studies from several other countries in Europe, we investigate the effects of the New Basel Capital Accord (Basel II) on bank capital requirements for small and medium sized enterprises (SMEs). For each country, we analyze different possibilities that banking organizations have in considering SMEs, as either retail or as corporate, with a special discount linked to the firm's sales size. We find that, for all the countries, banks will have significant benefits, in terms of lower capital requirements, when considering small and medium sized firms as retail customers. But they will be obliged to use the Advanced IRB approach (providing their own estimates of probability of default (PD) and loss given default (LGD) for each counterparty) and to manage them on a pooled basis. For SMEs as corporate, however, the results show that capital requirements will be slightly greater than under the existing Basel I Capital Accord. We believe that most eligible banks will use a blended approach (considering some SMEs as retail and some as corporate). Through a breakeven analysis, we find that for all of our countries, banking organizations will be obliged to classify as retail at least 20% of their SME portfolio in order to, at a minimum, maintain the current capital requirement (8%). Moreover, we show that the percentage of SMEs to be classified as retail increases to at least 40% if banks will want to enjoy lower capital requirements by implementing the Advanced IRB instead of the Standardized approach. Since one of the main goals of the new Basel Capital Accord is to improve the efficiency of banks risk management systems, we conclude that a likely impact will be an additional motivation for banks to consider and manage their SMEs clients as retail customers.
Download or read book The New Basel Capital Accord and SME Financing written by Rym Ayadi and published by Centre for European Policy Studies. This book was released on 2005 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: The First Basel Capital Accord, implemented in 1988, was aimed at ensuring the soundness and stability of the international banking system. The new accord, Basel II, which is planned for implementation in December 2006, is intended to strengthen the framework for dealing with credit risk. This book provides an informative analysis of what Basel II means for the small and medium-sized enterprize (SME) sector in Europe and its impact on its credit financing conditions. It also presents a detailed analysis of how banks formulate an internal rating system and illustrates how this system works in practice. Finally, it concludes with the key measures that should be taken by banks, SMEs, and public policymakers to improve financing in the new rating culture.
Download or read book The New Basel Capital Accord written by Benton E. Gup and published by Cengage Learning. This book was released on 2004 with total page 484 pages. Available in PDF, EPUB and Kindle. Book excerpt: Jonathan Edwards was a preacher, pastor, revivalist, and theologian. This volume unpacks his magnificent theological vision, which starts with God’s glory and ends with all creation returning to that glory. Sean Michael Lucas has converted his years of teaching on Edwards into this valuable work, which places Edwards’s vision in an accessible, two-part framework. Part one focuses on Edwards’s understanding of redemption history-God’s cosmic, grand work from eternity past to eternity future, where all things are united in Christ. Part two examines Edwards’s perspective on “redemption applied”-how that gracious, divine work unfolds in space and time to personally transform individuals, stirring their affections, illuminating their minds, and moving their wills to form new habits and practices. This overview of Edwards’s theology will prove to be a thought-provoking, encouraging guide to contemporary believers at every stage of their spiritual journey.
Download or read book International Convergence of Capital Measurement and Capital Standards written by and published by Lulu.com. This book was released on 2004 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Impact of Basel II on Small and Medium sized Enterprises in Germany written by Nickels Wieneke and published by GRIN Verlag. This book was released on 2005-01-14 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bachelor Thesis from the year 2004 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,7 (B+ 68%), Oxford Brookes University, language: English, abstract: This dissertation examines the current discussion about the introduction of the New Basel Capital Accord and the impact it will have on Small and Medium sized Enterprises in Germany. SMEs or the ‘Mittelstand’ are the carrying pillar for the German economy: 20 million employees work for SMEs and produce a value added subject to VAT of 49% of the German economy. These establishments are not only innovative and progressive in the way they conduct their business; its owners and managers are also an important factor for the aggregate demand in Germany. With reflection on the requirements of Basel II the major weaknesses of SMEs are revealed: their provision with own funds is traditionally low compared to large companies and bank loans present a main source of debt finance. Minimum capital requirements are an essential part of banking supervision and banking regulation and help ensuring the financial stability of an economy. Financial stability is vital for a country because it helps to absorb losses and protects consumers from the loss of their investments. This was not so in Thailand when the Asian Crisis started in 1997. One reason for the Asian Crisis, among others, was inadequate banking supervision. The Basel Committee has produced a set of minimum requirements for effective banking supervision which can be applied to every country. The so called ‘1988 Accord’ or ‘Basel I’ is currently being modified into ‘Basel II’ and likely to be introduced in the beginning of 2007. This paper is mainly concerned with the change in the calculation of minimum capital requirements (MCR), i.e. how much capital credit institutes put aside as a cushion against future losses. The main impact of Basel II on SMEs in Germany is that the future calculations of the MRC will depend on the company’s individual solvency and not on a fixed percentage of a loan.
Download or read book Consequences of basel II for small and mid sized enterprises written by Björn Schlüter and published by diplom.de. This book was released on 2002-06-26 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inhaltsangabe:Abstract: At present, rating is the number-one-topic discussed, both within the banking community and also, even more frequently, at enterprises. The second consultative package of the Basel Committee for Banking Supervision provides a basic change in equity capital contribution of banks. It is expected to change the rules of the credit business with institutional customers considerably. As a result, especially small and mid-sized enterprises are forced to enhance their credit standing in order not to struggle with the serious consequences of Basel II. This case study shows how! Inhaltsverzeichnis:Table of Contents: 1.INTRODUCTION4 1.1Overview4 1.2Definition of the new Basel Capital Accord4 1.3Targets5 1.4Structure5 2.BASICS6 2.1Small and mid-sized Enterprises (SMEs)6 2.1.1Definition of SMEs6 2.1.2EconomicSituation andImportance ofSMEs7 2.2Rating7 2.2.1Credit ratings7 2.2.2External ratings by rating agencies8 2.2.3Bank-internal ratings9 2.2.4Function of credit ratings10 2.2.5Rating procedure and structure12 2.2.6Rating as an opportunity to prepare for Basel II16 3.BASEL II - THE NEW BASELCAPITAL ACCORD18 3.1The Basel Committee of Banking Supervision18 3.2The way from Basel I to Basel II18 3.3Overview of the new Capital Approach19 3.3.1The first Pillar: Minimum Capital Requirements19 3.3.1.1In context of granting credits to small and mid-sized companies23 3.3.1.2Possibilities of asset securitisation26 3.3.2The second Pillar: Supervisory Review Process27 3.3.3The third Pillar: Market Discipline27 4.THE CONSEQUENCES OF BASEL'S RESOLUTIONS29 4.1Current financial requirements of the small to medium-sized business sector29 4.2Internal vs. external rating of SMEs31 4.3Actual preparation status of SMEs35 4.4Rating under aspects of Investor Relations42 4.5Alternative financing possibilities for SMEs44 4.5.1Effects on banks45 4.5.2Effects on interest rates for SMEs46 4.6Possibilities for SMEs to prepare for Basel II48 4.6.1Implementation of a value-based management50 5.CONCLUSION55 6.APPENDIX57 6.1Index of Abbreviations57 6.2Index of Literature58
Download or read book The Consequences of the New Basel Capital Accord Basel II for Bank Lending to Corporate Borrowers written by Katrin Sülberg and published by diplom.de. This book was released on 2004-07-09 with total page 109 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inhaltsangabe:Abstract: The central problem and resulting question of this thesis was: 'Will Basel II make credits in the Mittelstand more expensive?' In view of the previous analysis on possible capital requirements and changes in credit conditions for German small and medium-sized enterprises, the answer to this question can be adequately answered: On average, Basel II does not make credits in the Mittelstand more expensive. Basel II has an influence on the amount of regulatory capital the banks have to hold. The costs of this scarce factor are included in the risk premium which is part of the borrower s credit rent. Therefore, the credit rent would ceteris paribus be higher if capital requirements rose. However, it has been shown that for about 90% of German companies, capital requirements will even be lower in Basel II. This is because these companies will belong to the retail segment in Basel II where there is a reduction in regulatory capital (compared to the current 8%) up to a high probability of default between 7% and 8%, which would apply to a company in default or bankruptcy. Additionally, capital requirements for small and medium-sized enterprises can be further reduced due to the extended recognition of collaterals. Basel II has introduced types of collaterals that small and medium-sized companies are more often able to deliver, namely account receivables and real estate. It can therefore be concluded that a possible future increase in average credit rent levels for German small and medium-sized enterprises must have other reasons than the banks costs for regulatory capital. Zusammenfassung: Jede Wirtschaft beruht auf einem Kreditsystem, das heißt, auf der irrtümlichen Annahme, der andere werde gepumptes Geld zurückzahlen (Kurt Tucholsky, 1931) Kreditinstitute spielen eine besondere Rolle in modernen Volkswirtschaften. Sie sind nicht nur Mittler zwischen Kreditnehmern und Einlegern, sondern stellen darüber hinaus vielfältige nicht bilanzwirksame Finanzdienstleistungen zur Verfügung. Dabei ist der professionelle Umgang mit Kredit-, Markt-, Liquiditäts- und anderen Risiken eine der wichtigsten Leistungen von Finanzintermediären. Solche Risiken dürfen jedoch nicht zu Instabilitäten im Finanzsektor führen. Über die eigene Risikovorsorge der Institute hinaus wurden deshalb besondere Aufsichtsregeln für Kreditinstitute geschaffen, unter denen die Eigenkapitalregeln eine herausragende Rolle einnehmen. Im dynamischen und [...]
Download or read book The New Basel Capital Accord and the Future of the European Financial System written by Rym Ayadi and published by CEPS. This book was released on 2004 with total page 108 pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this report is to provide a detailed, up-to-date and critical analysis of the New Basel Capital Accord framework. It focuses on the limitations and pitfalls that may deserve further investigation, particularly at the European level. Moreover, it provides a provisional assessment of its effects on small- and medium-sized European banks, as well as small- and medium-sized European enterprises. It examines the procyclicality of the new Accord and offers mechanisms to counter it. Finally, it addresses the challenges of implementing the new rules at the EU level.
Download or read book Studies on the Potential Impacts of the New Basel Capital Accord written by Katalin Mérő and published by . This book was released on 2003 with total page 160 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Risk Based Capital written by Orice M. Williams and published by DIANE Publishing. This book was released on 2009-05 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: Basel II, the new risk-based capital framework based on an international accord, is being adopted by individual countries. It includes standardized and advanced approaches to estimating capital requirements. In the U.S., bank regulators have finalized an advanced approach rule that will be required for some of the largest, most internationally active banks and proposed an optional standardized approach rule for non-core banks that will also have the option to remain on existing capital rules. This report examines: (1) the markets in which banks compete; (2) how new capital rules address U.S. banks' competitive concerns; and (3) actions regulators are taking to address competitive and other potential negative effects during implementation. Illus.
Download or read book Basel Capital Requirements and Credit Crunch in the MENA Region written by Mr.Sami Ben Naceur and published by International Monetary Fund. This book was released on 2013-07-03 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: The 1988 Basel I Accord set the common requirements of bank capital to promote the soundness and stability of the international banking system. The agreement required banks to hold capital in proportion to their perceived credit risks, and this requirement may have caused a “credit crunch,” a significant reduction in the supply of credit. We investigate the direct link between the implementation of the Basel I Accord and lending activities, using a data set spanning annual observations covering 1989–2004 for banks in Egypt, Jordan, Lebanon, Morocco, and Tunisia. The results provide clear support for a significant increase in credit growth following the implementation of capital regulations, in general. Despite higher capital adequacy ratios, banks expanded credit and asset growth. Credit growth appears to be driven by demand fluctuations attributed to real growth, cost of borrowing, and exchange rate risk. Overall, the effects of macroeconomic variables, in contrast to capital adequacy, appear to be more dominant in determining credit growth, regardless of the capital adequacy ratio, and regardless of variation across banks by nationality, ownership, and listing.
Download or read book Potential Competitive Effects of Basel II on Banks in SME Credit Markets in the United States written by Allen N. Berger and published by . This book was released on 2004 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The New Basel Capital Accord Structure Possible Changes and Micro and Macroeconomic Effects written by Andrea Resti and published by Ceps. This book was released on 2002 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Basel II written by United States. Congress. House. Committee on Financial Services. Subcommittee on Financial Institutions and Consumer Credit and published by . This book was released on 2005 with total page 240 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Impact of Basel II Reforms written by Apolline Charpentier and published by . This book was released on 2014 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: The implementation of Basel II reforms has been designed to protect the international financial system from major bank collapses through the enforcement of minimum capital adequacy ratios. This new set of rules has raised concerns of triggering changes in institutions' business models leading to credit contraction, which in turn could potentially contribute to slower global economic development. Small and Middle Enterprises, which have traditionally been engines of growth, innovation, and R&D in Europe, are highly reliant on bank loans as opposed to equity funding. This thesis focuses on the specific impact of Basel II reforms on SME access to financing. The paper is structured around four sections. Part I provides a technical summary of the regulation, focusing on the specific capital requirements for SMEs. Part II reviews today's literature on the topic. Finally, parts III and IV respectively provide a theoretical and empirical examination of the consequences of the reforms on SME financing. Based on these analyses, this thesis supports the conclusion that Basel II reforms have not been the cause of a contraction in SME lending.
Download or read book Credit Risk written by Georg Bol and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 334 pages. Available in PDF, EPUB and Kindle. Book excerpt: New developments in measuring, evaluating and managing credit risk are discussed in this volume. Addressing both practitioners in the banking sector and resesarch institutions, the book provides a manifold view on one of the most-discussed topics in finance. Among the subjects treated are important issues, such as: the consequences of the new Basel Capital Accord (Basel II), different applications of credit risk models, and new methodologies in rating and measuring credit portfolio risk. The volume provides an overview of recent developments as well as future trends: a state-of-the-art compendium in the area of credit risk.
Download or read book Bank Capital and Risk Taking written by Stéphanie M. Stolz and published by Springer Science & Business Media. This book was released on 2007-10-24 with total page 163 pages. Available in PDF, EPUB and Kindle. Book excerpt: The year-long consultations on Basel II mirror the international popularity of capital requirements as a regulatory instrument. Yet, the impact of capital requirements on banks' behavior is not fully understood. The aim of this study is to contribute to this understanding.
