Basel II and the Effects on the Banking Sector

Thomas Hartmann-Wendels, Peter Grundke and Wolfgang Spörk
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Wolfgang Spörk: University of Cologne

A chapter in Risk Management, 2005, pp 3-24 from Springer

Abstract: 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.

Keywords: Basel II; Capital Requirements; Credit Risk; Ratings (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/3-540-26993-2_1

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