Abstract
Basel II will dramatically change the allocation of regulatory equity capital to credit risk positions. Instead of an uniform 8 % capital charge regulatory equity capital will depend on the size of the credit risk, measured either by external or by internal rating systems. This will lead to a dramatic change in the bank-debtor relation. Credit spreads will widen and for high risk borrowers it may become difficult to get new loans. The major Basel II rules are surveyed and their consequences for bank lending are discussed.
The survey on the Basel II rules is based on the information released by the Basel Committee on Banking Supervision until the submission deadline of this contribution in October 2003.
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Hartmann-Wendels, T., Grundke, P., Spörk, W. (2005). Basel II and the Effects on the Banking Sector. In: Frenkel, M., Rudolf, M., Hommel, U. (eds) Risk Management. Springer, Berlin, Heidelberg. https://doi.org/10.1007/3-540-26993-2_1
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DOI: https://doi.org/10.1007/3-540-26993-2_1
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-22682-6
Online ISBN: 978-3-540-26993-9
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