This paper examines how Basel III capital reforms affected bank lending in Ger- many. We focus on the increase of …-based capital regulation significantly affected low capitalized banks. The impact depends on a bank's credit risk model, i ….e. whether a bank applies the standardized approach (SA) or an internal ratings-based approach (IRBA) to determine risk weights …

A bank's decision on loan supply and capital structure determines its immediate bankruptcy risk as well as the future … availability of internal funds. These internal funds in turn determine a bank's future costs of external finance and future …-to-asset ratios, liquidity coverage ratios and regulatory margin calls on the dynamics of loan supply and bank stability. Only …

lending behavior and risk sensitivity of a risk-neutral bank. CDS contracts may be used to hedge a bank’s credit risk exposure … at a certain (potentially distorted) price. Regulation is found to induce the risk-neutral bank to behave in a more risk … credit risk. Under the substitution approach in Basel II (and III) a risk-neutral bank will over-, fully or under-hedge its …

This paper examines the relationship between central bank funding and credit risk-taking. Employing comprehensive bank …-firm-level data from the German credit registry during 2009:Q1-2014:Q4, we find that borrowing from the central bank is associated … with rebalancing of bank portfolios towards ex-ante riskier firms. We further establish that this relationship is …

The internal ratings-based (IRB) approach maps bank risk profiles more adequately than the standardized approach. After … may only enforce strict supervision on capital requirements if they do not jeopardize bank existence. …