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Consequences Of Basel Ii For Small And Mid Sized Enterprises
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Book Synopsis Consequences of basel II for small and mid-sized enterprises by : Björn Schlüter
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
Book Synopsis The Impact of Basel II on Small and Medium sized Enterprises in Germany by : Nickels Wieneke
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.
Book Synopsis International Convergence of Capital Measurement and Capital Standards by :
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:
Book Synopsis The Consequences of the New Basel Capital Accord (Basel II) for Bank Lending to Corporate Borrowers by : Katrin Sülberg
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 Basel II written by Adrian Verardi and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines reactions of the Swiss economy to Basel II on micro- and macro-economic levels. Mostly the largest international banks active in the credit business will introduce the internal ratings-based approach (IRB), whereas other banks might use the standardized approach. If risk management is not adopted at banks using the standardized approach, adverse selection could occur. Secondly, due to shifts in credit segments, large companies that have A-ratings will profit while others might lose. SMEs (Small and Medium-sized Enterprises) could see their costs rise if they do not take part in an arms race for lower credit weights. Increases in bankruptcies or unemployment are not likely to happen in Switzerland. Furthermore, the stability of the financial System will not increase in Switzerland. It even risks Coming under more pressure due to the competition between near-banks and banks, and between Switzerland and countries applying different options of Basel II. However, possible higher credit prices and credit constraints will not be strong, and banks will incur additional expenses for the implementation of Basel II so that a negative multiplier effect is not expected to härm growth. Overall, this paper argues that Switzerland is neither better nor much worse off with Basel II but has to adhere to an international Standard for the sake of reputation and other competitive reasons. Thus a special Swiss Finish, a Swiss interpretation of Basel II, and a two-way communication policy between banks, companies and the public are essential for successful implementation. Companies need to acquire more knowledge about Basel II and insight into the banks credit price calculation. In addition, appropriate measures to inform the public will be essential to avoid possible dissociation from Basel II in case the New Accord is blamed for being inconsiderate.
Book Synopsis An Investigation of the Impact of Basel II on the Improvement in Risk Management Practice Globally by : Frédérik Arns
Download or read book An Investigation of the Impact of Basel II on the Improvement in Risk Management Practice Globally written by Frédérik Arns and published by GRIN Verlag. This book was released on 2007-09 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay from the year 2006 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: A, University of Westminster (Westminster Business School), course: International Risk Management, 19 entries in the bibliography, language: English, abstract: The new Basel Accord will be introduced in 2007, this publication examines in how far the new package of regulations will benefit risk management globally. After evaluating contradictory points of view of several internationally active groups, the author comes to the conclusion that even though the final impact cannot yet be observed Basel II is likely to improve the current situation of risk management in the market.
Book Synopsis The New Basel Capital Accord and SME Financing by : Rym Ayadi
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.
Book Synopsis Potential Competitive Effects of Basel II on Banks in SME Credit Markets in the United States by : Allen N. Berger
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:
Book Synopsis Basel III Implementation and SME Financing by : Boris Fišera
Download or read book Basel III Implementation and SME Financing written by Boris Fišera and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Basel II Reform and the Provision of Finance for R&D Activities in SMEs by : Giuseppe Scellato
Download or read book The Basel II Reform and the Provision of Finance for R&D Activities in SMEs written by Giuseppe Scellato and published by . This book was released on 2007 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we investigate the issue of financial constraints to innovation in SMEs in Italy with respect to the future changes in the banking system, which will be driven by the adoption of the new version of the Basel Capital Accord, scheduled to be implemented after 2006. The study is based on firm-level data from the Mediocredito survey (2004). The availability of a qualitative indicator of financial constraints allows us to estimate possible determinants of credit rationing. Our empirical analysis is twofold: first, we implement a probit model in order to observe if the indicators of Ramp;D intensity exert a significant impact on the probability of being denied credit. After deriving these results, which in general suggest a weak effect of the variables accounting for Ramp;D intensity on the probability of a firm declaring the need of additional financial resources, we perform a simulation on the potential impacts of the adoption of the Basel II capital requirements by Italian banks on lending conditions to small and medium enterprises involved in product innovation.
Book Synopsis The New Basel Capital Accord and the Future of the European Financial System by : Rym Ayadi
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.
Book Synopsis Importance of Basel III for lending alternatives to SMEs by : Daniel Hosp
Download or read book Importance of Basel III for lending alternatives to SMEs written by Daniel Hosp and published by GRIN Verlag. This book was released on 2013-02-05 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2012 in the subject Business economics - Investment and Finance, grade: 1, University of Innsbruck, course: Aktuelle Themen in Banking and Finance, language: English, abstract: Basel III is currently on everyone’s lips. Some weeks before the introduction of the first requirements it is still not fully clear how and which parts of it will be implemented. Several studies about the impact of Basel III on bank loan availability for small and medium sized companies (SMEs ) do exist (e.g. McKinsey (2010)) which have shown that the introduction of those new regulatory requirements hamper the access for SMEs to sufficient sources of funding. This raises the question if these restrictions for bank lending can be substituted by some alternative funding source or if the availability of external finance to SMEs will be constrained under Basel III. This seminar paper focuses on the lending alternatives apart from bank loans and the possibility of gathering additional equity capital. This is basically the so called asset based finance. Thereby the paper concentrates on European SMEs as long as their conditions are quite similar to those of Austrian SMEs and the introduction of Basel III can be expected to be most strict for European financial institution and thus may hit those SMEs the most. Before starting with the explanation of different lending alternatives the importance of SMEs for the global economy should be pointed out. The importance is especially present in Europe. SMEs account for two third of the total employment in the EU-27 area and they generated more economic growth from 2002 to 2008 than large firms did (Oxford Economics, 2011). Moreover they represent 99% of all businesses that exist in Europe (European Commission, 2005). So SMEs are the main driver of economic growth, employment and wealth in Europe. Apart from that each single SME does not have a systematic risk and they were also not responsible for the current financial crisis. Thus SMEs should generally be supported to sustain growth and employment. Nevertheless the rules of Basel III may have highly negative influences on their financing possibilities which moreover has a negative effect on the real economy...
Book Synopsis Effects of the New Basel Capital Accord on Bank Capital Requirement for SMEs by : Edward I. Altman
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.
Book Synopsis The Modeling & Operationalization of Basel II Accord for Turkish Smes by : Can Tansel Kaya
Download or read book The Modeling & Operationalization of Basel II Accord for Turkish Smes written by Can Tansel Kaya and published by LAP Lambert Academic Publishing. This book was released on 2011-08 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: Ever changing global markets with complex structures forced many actors to modify their systems. These actors who make up the financial system range from financial markets to banks all the way down to simple investors. Especially for banking, significant events of the early 1970s like the discontinuation of fixed exchange rate and the petroleum crises of 1974, had significant effects to trigger authorities even more to establish a sound global banking system. Late 1970s and early 1980s has been the period of substantial deregulation. As a result of this development, major banking crisis emerged towards the end of 1980s. Therefore, banking crisis has expediated the necessity of a strong regulatory process in world banking. Though Basel II aims to fix weaknesses of the banking system, the new accord leads banks to act in an abrasive manner towards small and medium-sized enterprises (SMEs). The purpose of this research is to evaluate the desirability of the International Financial Reporting Standards for small to medium-sized enterprises in Turkey, and their readiness to apply these International Financial Reporting Standards in the light of Basel II.
Book Synopsis From Basel I to Basel III: Sequencing Implementation in Developing Economies by : Caio Ferreira
Download or read book From Basel I to Basel III: Sequencing Implementation in Developing Economies written by Caio Ferreira and published by International Monetary Fund. This book was released on 2019-06-14 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Developing economies can strengthen their financial systems by implementing the main elements of global regulatory reform. But to build an effective prudential framework, they may need to adapt international standards taking into account the sophistication and size of their financial institutions, the relevance of different financial operations in their market, the granularity of information available and the capacity of their supervisors. Under a proportionate application of the Basel standards, smaller institutions with less complex business models would be subject to a simpler regulatory framework that enhances the resilience of the financial sector without generating disproportionate compliance costs. This paper provides guidance on how non-Basel Committee member countries could incorporate banks’ capital and liquidity standards into their framework. It builds on the experience gained by the authors in the course of their work in providing technical assistance on—and assessing compliance with—international standards in banking supervision.
Book Synopsis Capital Requirements for Smes Under the Revised Basel Ii Framework by : Jan S. Henneke
Download or read book Capital Requirements for Smes Under the Revised Basel Ii Framework written by Jan S. Henneke and published by . This book was released on 2006 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article reviews the final changes in the Benchmark Risk Weight Function of the Basel II proposal as of June 2004. A special focus is directed to the impact of the proposed changes to the segment of Small and Mid-Sized Enterprises (SME). One of the main objectives of the recalibration of the IRB approach was to relieve capital requirements for these institutions. We further provide a comprehensive survey of empirical findings on the relationship between the asset correlation and the model parameters probability of default (PD) and firm size. We find that neither the level of asset correlation nor the assumed relationship between correlation and probability of default as it is assumed in the capital accord can be observed in the market. In a final case study we investigate the implications of changes in regulatory capital on credit spreads for SMEs.
Book Synopsis The New Basel Capital Accord by : Benton E. Gup
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.
