The Effects of basel II capital adequacy accord on small and medium enterprises' working capital loans

ABSTRACTMaster ThesisThe Effects of Basel II Capital Adequacy Accord on Small and MediumEnterprises? Working Capital LoansKamile Berna AYDOĞMUŞOĞLUDokuz Eylül UniversityInstitute of Social SciencesEconomy ChairMoney and Banking ProgramGlobalization along with the economic integration process force localbanks to make their duties in international standards. This makes the usage ofinternationally reconciled new credit rating systems necessary especially withabandoning traditional evaluation systems.It?s been planning that Basel II Capital Adequacy Accord which isworking since the start of 2007 in G-10 countries, will come into force from 2008in the other countries. Because of this, local banks required to carry out theregulations to make them prepared to Basel II transition period. It?s expected tobe carried out a more simplified approach used in calculation of credit risknamed standard approach. In the following period, while banks have improvedtheir sub-systems to the minimum administrative level, they will be using moredeveloped rating approaches.In the study, the risks of the loans, provided to Small and MediumEnterprises (SME) which have a great volume in Turkish economy along withsome certain advantages and disadvantages, under some certain assumptionsis evaluated by traditional and new models, and supported by this, capitaladequacy of the banks are determined and evaluated the effects of thissituation on loan prices. In this way, it?s been evaluated the traditional and newcredit evaluation and rating models and the effects of this models on banks?credit cost and SME?s cost of capitalKeywords: 1) Basel II, 2) SME, 3) Capital Adequacy, 4) Rating, 5) Credit Risk.v