The solution adopted in Basel II to deal with procyclicality of capital requirements (i.e. through the cycle ratings and long-run average estimates of default probabilities) implies a reduction in the risk-sensitivity that contradicts the original spirit of the new framework.In order to preserve...

The introduction of Basel II has raised concerns about the potential impact of risk-sensitive capital requirements on the business cycle.  Several approaches have been proposed to assess the procyclicality issue.  In this paper, we adopt a general equilibrium model and conduct comprehensive...

The Importance of the Principle of Justification in Firing: The Paradox of "Free Paid Dismissal" in Spanish Labour Law in Times of Crisis This paper describes Spanish legislation on dismissal, as amended after the reforms passed between 2010 and 2012, at the height of the economic crisis. The...

A relevant issue in the procyclicality debate over Basel II is the type of rating which could be preferred from both an individual and an economy-wide point of view in the light of the relation between capital requirements and the business cycle. The objective of the present paper is to evaluate...

Small-medium enterprises (SMEs) encounter financial constraints when they try to obtain credit from banks. These constraints are particularly severe for innovative SMEs. Thus, developing models for innovative SMEs that provide reliable estimates of their probabilities of default (PD) is...