Arbeitspapier

The New Basle Accord, Internal Ratings, and the Incentives of Banks

The Basle Accord of 1988 regulates how much equity banks must set aside as a cushion against the default risk. In its 1999 proposal for a new Accord, the Basle Committee seeks to introduce different equity ratios for customers of different risk levels. The proposal strongly favors external ratings as a means of risk determination. German banks, on the other hand, demand acknowledgement of their internal ratings. This paper shows that, even if assumed that banks have better diagnosis skill than external rating agencies, external ratings are better able to implement the goals of the Basle Committee than internal ratings. This is due to a lack of incentives to truthfully reveal their diagnosis results. These incentives may be provided by supervision of internal ratings, even if imperfect and only occasional. However, this requires that a fine be imposed if the supervising authority comes to a result different from the internal rating assigned by the bank.

Sprache
Englisch

Erschienen in
Series: CSLE Discussion Paper ; No. 2000-06

Klassifikation
Wirtschaft
Criteria for Decision-Making under Risk and Uncertainty
Law and Economics: General
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Thema
diagnosis theory
imperfect decision making
credit worthiness tests
Eigenkapitalvorschriften
Kreditwürdigkeit
Ökonomischer Anreiz
Kreditgeschäft
Theorie
Deutschland

Ereignis
Geistige Schöpfung
(wer)
Kirstein, Roland
Ereignis
Veröffentlichung
(wer)
Universität des Saarlandes, Center for the Study of Law and Economics (CSLE)
(wo)
Saarbrücken
(wann)
2000

Handle
Letzte Aktualisierung
20.09.2024, 08:22 MESZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Kirstein, Roland
  • Universität des Saarlandes, Center for the Study of Law and Economics (CSLE)

Entstanden

  • 2000

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