Stephanou, ConstantinosMendoza, Juan Carlos2012-06-202012-06-202005-04https://hdl.handle.net/10986/8557The objective of this paper is to provide an overview of the changes in the calculation of minimum regulatory capital requirements for credit risk that have been drafted by the Basel Committee on Banking Supervision (Basel II). Even though the revised credit capital rules represent a dramatic change compared to Basel I, it is shown that Basel II merely seeks to codify (albeit incompletely) existing good practices in bank risk measurement. However, its effective implementation in many developing countries is hindered by fundamental weaknesses in financial infrastructure that will need to be addressed as a priority.CC BY 3.0 IGOACCOUNTINGACCOUNTSARBITRAGEASSET PRICESBANK CAPITALBANKING SUPERVISIONBANKING SYSTEMBANKING SYSTEMSBANKSBONDSCAPITAL ADEQUACYCAPITAL ADEQUACY RULESCAPITAL REQUIREMENTCAPITAL REQUIREMENTSCAPITALIZATIONCENTRAL BANKCENTRAL BANKSCOMMERCIAL CREDITCOMMERCIAL LOANSCONSOLIDATIONCOVERAGECREDIT INSTITUTIONSCREDIT RATINGSCREDIT RISKCREDIT RISK MANAGEMENTDEBTDEFAULT RISKDISCOUNT RATEECONOMIC CONDITIONSECONOMIC RISKECONOMIC VALUEEXPECTED PRESENT VALUEEXPECTED VALUEFACE VALUEFINANCIAL INFORMATIONFINANCIAL INNOVATIONFINANCIAL INSTITUTIONSFINANCIAL INTERMEDIATIONFINANCIAL RATIOSFINANCIAL STRENGTHFOREIGN EXCHANGEFRAUDGROWTH RATEINCOME STATEMENTSINSURANCEINSURANCE COMPANIESINTEREST INCOMEINTEREST RATEINTERNATIONAL ACCOUNTING STANDARDSINTERNATIONAL BANKINGLEGAL FRAMEWORKLEVEL PLAYING FIELDLIABILITYLIQUIDATIONLIQUIDITYLOAN LOSS PROVISIONSMARKET DISCIPLINEMARKET RISKMARKET RISKSMARKET VALUEMORTGAGESOPERATIONAL RISKOPERATIONAL RISKSOPPORTUNITY COSTPORTFOLIOPORTFOLIO THEORYPORTFOLIOSPRESENT VALUEPROBABILITY OF DEFAULTPROFITABILITYPUBLIC DEBTRATESRATING AGENCIESRETURN ON EQUITYRISK ASSESSMENTRISK FACTORSRISK MANAGEMENTRISK MEASUREMENTRISK MITIGATIONRISK NEUTRALRISK PROFILESRISK REDUCTIONRISK WEIGHTED ASSETSRISK-WEIGHTED ASSETSSECURITIZATIONSMALL BUSINESSSOLVENCYSOLVENCY RATIOSSOVEREIGN RISKSTOCK PRICESSUPERVISORY AUTHORITIESTIER 1 CAPITALUNDERWRITINGVALUATIONVALUE ADDEDWorld Bank10.1596/1813-9450-3556