The impacts of basel-ii on the sme loans

For banks, capital is the last line of defense which enables them tosurvive where adverse events occur. When defections in the managementoccur and the prudential reserves are not adequate, the losses that banksare expossed to, are covered by capital. Therefore, banks may gobankrupt when capital is inadequate. On tjis account, determination of themin. regulatorylevel of bank capital has become one of the fundementalwork fields for bank supervisors.International standardization of the capital adequacy regimes ofbanks was first realized the publication of Basel-I. Soon after thepublication of Basel-I. It started to be implemented by many countries,however over against the vertiginous developments in the banking sector,the validity of Basel-I started to be questioned after a short while. BaselCommittee started the preparation of a new Standard, which is namelyBasel-II, in 2004. Basel II, which requires capital levels commensurate withthe risk realistically, is a more comprehensive and technical text whencompared to Basel-I. This type of comprehensive and technical text isundoubtedly expected to have considerable impacts on many sectors,primarily the banking sector. SMEs are one of the most controversialones among them.In this study, it is aimed to evaluate the possible impacts of Basel-IIon the SME loans; the impact of Basel-II on SME loans are assessed fromthe perspective of banks and SMEs.