Application of rating score for SMES in the framework of Basel consensus

Basel Committee on Banking Supervision, a part of Bank for International Settlements (BIS) which consists of Central Banks of developed countries and banking sector supervision authorities, has affected enterprises in various ways through its regulations regarding banking sector. One of the consequences of its regulations is mandatory rating application for enterprises that demand bank credits.In this study, a logistic regression model is to develop estimaterisk of financial failure for Turkish firms decribed as SMEs by Basel II. As an application example the model is used to estimate the succsess probabilities of two firm?s, one of which is quated in Istanbul Stock Exchange Market and the other registered in the is dataset of Small and Medium Industry Development Organization.