Basel III: Will Borrowing Money from Czech Banks Become More Expensive?

Artikel

We estimate the required increase in banks’ lending spreads assuming that banks under regulatory pressure would raise lending spreads to prevent ROE from falling when the capital regulation is tightened. We focus our analysis on six Czech banks that are under regulatory pressure, and are therefore the ones most affected by the increased capital requirement. We follow the mapping methodology presented by King (2010). We find that the required increase in lending spreads to keep ROE from falling totals 6.3 basis points. We conclude that the impact of tightened capital regulation on lending spreads in the Czech banking sector is minor. If shareholders decide to absorb some of the fall in ROE, or they take other measures to prevent a fall in ROE, the potential impact on lending spreads will be even smaller.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: European Financial and Accounting Journal ; ISSN: 1805-4846 ; Volume: 9 ; Year: 2014 ; Issue: 2 ; Pages: 4-27 ; Prague: University of Economics, Faculty of Finance and Accounting

Classification and Topics

• Classification: Management ; Financial Institutions and Services: Government Policy and Regulation
• Subject: Lending spreads ; Capital requirement ; Capital adequacy ; Basel III

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Matejašák, Milan
• Event: Veröffentlichung
• (who): University of Economics, Faculty of Finance and Accounting
• (where): Prague
• (when): 2014

Further information

• DOI: doi:10.18267/j.efaj.117
• Handle: http://hdl.handle.net/10419/109922
• Last update: 10.03.2025, 11:45 AM CET