The impact of Basel II reforms : a contraction in SME lending

The implementation of Basel II reforms has been designed to protect the international financial system from major bank collapses through the enforcement of minimum capital adequacy ratios. This new set of rules has raised concerns of triggering changes in institutions' business models leading to credit contraction, which in turn could potentially contribute to slower global economic development. Small and Middle Enterprises, which have traditionally been engines of growth, innovation, and R&D in Europe, are highly reliant on bank loans as opposed to equity funding. This thesis focuses on the specific impact of Basel II reforms on SME access to financing. The paper is structured around four sections. Part I provides a technical summary of the regulation, focusing on the specific capital requirements for SMEs. Part II reviews today's literature on the topic. Finally, parts III and IV respectively provide a theoretical and empirical examination of the consequences of the reforms on SME financing. Based on these analyses, this thesis supports the conclusion that Basel II reforms have not been the cause of a contraction in SME lending.

Department dc:contributor.department

Sloan School of Management.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2014

Author dc:creator

• Charpentier, Apolline

Advisor dc:contributor.advisor

• Athanasios Orphanides.

• Sloan School of Management.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/90234

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/90234