' line of credit, the bank/lender is actually confirming that the borrower has a low level of information asymmetry and …

institutions can engage in ?ratings arbitrage? to target higher external credit ratings without having to increase capital levels …

credit rating, which is in turn determined by the probability of default. If actual capital held by the bank is allocated … capital charge based on the actual capital held by the bank ? in turn based on target credit rating ? is invariant to the … functions in context of actual (economic) capital held by the bank based on the bank's desired external credit rating and …

This paper develops a framework for examining the impact of changes in the solvency standard of a bank (target credit …. However, a higher credit rating should also reduce the cost of rated-debt that a bank uses to fund its assets. We develop a … matched by the reduction in the cost of rated-debt, and compare our theoretically-derived results to actual credit spreads on …

threshold) and is linked to an implied credit rating. In Australia, for example, the top four banks maintain sufficient economic … capital to achieve a target credit rating of AA, which is equivalent to a 0.03% probability of insolvency. The benefits that … accrue to banks from a high credit rating, in general, are access to lower cost funds in debt markets and low counterparty …

also provides a range of options for determining the capital requirements for credit risk and operational risk to allow …