Bank risk ratings and cost of the basle II criteria to Turkish banking system

After the publication of the new Basel capital accord, banks? risk rating and banks? internal rating systems have been one of the most popular subjects of finance literatüre. While risk ratings have been assigned to issuers and issues by credit rating agencies since early of the twentieth century, rating is a new deal of banks. However, in recent years many bank have attempted to improve measurement and management of credit risk by assigning risk ratings to business loans. We have knowledge about big banks using ratings for their lending process but we have a liitle information about the implementations of small banks and the banks in operating in underdeveloped or demerging countries. It is expected from bank to use internal rating systems for measurement and management of credit risk by the transition of the implementation of Basel II. In this paper, firstly, I have tried to describe the rating systems of credit rating agencies. Secondly, I have examined new Basel capital accord (Basel II), the last section is about the effects of risk ratings under Basel II and conditions of financial crisis on Turkish banking sector.Keywords: Risk Rating, Basel II, Subprime Mortgage Crisis