In the current regulatory framework, capital requirements are based on risk-weighted assets, but all business loans … carry a uniform risk weight, irrespective of variations in credit risk. The proposed new Capital Accord of the Bank for … International Settlements provides for a greater sensitivity of capital requirements to credit risk, raising the question of whether …

In recent years many banks have attempted to improve the measurement and management of credit risk by assigning risk … information on the use of risk ratings by smaller banks. Recent revisions to the Federal Reserve's Survey of Terms of Business … of risk rating systems at banks of all sizes. We find that the use of risk rating systems is quite widespread, but that …