• Login
    View Item 
    •   Vlerick Repository Home
    • Research Output
    • Research Communication
    • View Item
    •   Vlerick Repository Home
    • Research Output
    • Research Communication
    • View Item
    JavaScript is disabled for your browser. Some features of this site may not work without it.

    Browse

    All of Vlerick RepositoryCommunities & CollectionsPublication DateAuthorsTitlesSubjectsKnowledge Domain/IndustryThis CollectionPublication DateAuthorsTitlesSubjectsKnowledge Domain/Industry

    My Account

    LoginRegister

    Contact & Info

    ContactVlerick Journal ListOpen AccessVlerick Business School

    Statistics

    Display statistics

    The optimal rating philosophy for the rating of SMEs

    • CSV
    • RefMan
    • EndNote
    • BibTex
    • RefWorks
    Thumbnail
    Name:
    Rikkers_F_WP_TheOptimalRatingP ...
    Size:
    208.9Kb
    Format:
    PDF
    Download
    Publication type
    Working paper
    Author
    Rikkers, Frieda
    Thibeault, André
    Publication Year
    2007
    Publication Issue
    10
    Publication Number of pages
    39
    
    Metadata
    Show full item record
    Abstract
    The objective of this research is to determine the optimal rating philosophy for the rating of SMEs, and to describe the consequences of the chosen philosophy on several related aspects. As to our knowledge, this is the first paper that studies the considerations of financial institutions on what rating philosophy to adopt for specific portfolios. The importance for banks to have a solid risk framework to predict credit risk of their counterparties is well reflected by the quality and the quantity of research on this subject. Moreover, a good risk framework is vital to become compliant with the new Basel II framework. Problem is that financial institutions nearly always neglect the first step in the rating model development process: the determination of the rating philosophy. It is very important for financial institutions to decide whether they want their internal rating systems to grade borrowers according to their current condition (point-in-time), or their expected condition over a cycle and in stress (through-the-cycle), because the rating philosophy influences many aspects such as: credit approval, pricing, credit and portfolio monitoring, the regulatory and internal capital requirements and the competitive position of a bank. This makes the question which rating philosophy to use very important. Moreover, many different modelling techniques exist to determine credit risk, but few attempts have been devoted to credit risk assessment of small commercial loans, although SME exposures are relatively important for European banks. SMEs have specific characteristics that influence the rating philosophy and therefore the development and use of credit risk models. These SME characteristics are taken into account in the analysis to determine the optimal rating philosophy. Keywords: rating philosophy, small business, Basel II, credit rating, banks JEL classification codes: D82, E32, G20, G28, G33
    Keyword
    Corporate Finance
    Knowledge Domain/Industry
    Accounting & Finance
    URI
    http://hdl.handle.net/20.500.12127/2327
    Other links
    http://public.vlerick.com/Publications/a4bf3325-6aa9-e011-8a89-005056a635ed.pdf
    Collections
    Research Communication

    entitlement

     
    DSpace software (copyright © 2002 - 2022)  DuraSpace
    Quick Guide | Contact Us
    Open Repository is a service operated by 
    Atmire NV
     

    Export search results

    The export option will allow you to export the current search results of the entered query to a file. Different formats are available for download. To export the items, click on the button corresponding with the preferred download format.

    By default, clicking on the export buttons will result in a download of the allowed maximum amount of items.

    To select a subset of the search results, click "Selective Export" button and make a selection of the items you want to export. The amount of items that can be exported at once is similarly restricted as the full export.

    After making a selection, click one of the export format buttons. The amount of items that will be exported is indicated in the bubble next to export format.