flat capital requirements if the approach is applied uniformly across banks and if the costs of implementation are not too … high. However, the banks' right to choose between the standardized and the IRB approaches under Basel II gives larger banks … a competitive advantage and, due to fiercer competition, pushes smaller banks to take higher risks. This may even lead …

Our paper addresses firm size as a driver of systematic credit risk in loans to small and medium enterprises (SMEs …). Key contributions are the use of a unique data set of SME lending by over 400 German banks and relating systematic risk to … particularly rich and well developed credit market for SMEs in Germany. We estimate asset correlations as the key measure of …

. Using a model with imperfect competition and moral hazard, we find that small banks (and hence small borrowers) may profit … from the introduction of an internal ratings based (IRB) approach if this approach is applied uniformly across banks …. However, the banks' right to choose between the standardized and the IRB approaches unambiguously hurts small banks, and …

We introduce banks, modeled as in Diamond and Rajan (JoF 2000 or JPE 2001), into a standard DSGE model and use this … framework to study the role of banks in the transmission of shocks, the effects of monetary policy when banks are exposed to …

This paper studies loan activity in a context where banks must follow Basel Accord-type rules and acquire financing …

This paper investigates the incentives for banks to bias their internally generated risk estimates. We are able to … by low-capital banks to improve regulatory ratios. At the portfolio level, the difference in borrower probability of … credits. In addition, we find that low-capital banks' risk estimates have less explanatory power than those of high …