Banks’ holding of reasonable capital buffers in excess of minimum requirements could alleviate the procyclicality … an important risk management issue for banks, which the Basle Committee (2002) suggests should be approached via stress … standard credit portfolio analysis in that we simulate actual bank capital and minimum capital requirements simultaneously …

of capital requirements on the allocation of credit and its interaction with procyclicality, and compare Basel I and … capital requirements. The biggest reduction in procyclicality is however achieved with optimal risk-based capital requirements …

of Basel II on the efficiency of bank lending. We consider competitive credit markets where entrepreneurs may apply for … the cyclicality of bank lending over the business cycle. …