This paper examines how Basel III capital reforms affected bank lending to nonfinancial firms in Germany, with a focus on small and medium-sized enterprises (SMEs). Basel III may have particularly hampered the financing of SMEs, since bank lending is their most important source of external finance. We focus on the increase of minimum risk-based capital requirements (RBC) and on the introduction of the leverage ratio (LR), which ‑in simple terms- corresponds to the unweighted capital ratio. We measure the impact on lending volumes, maturity and on collateralization. The analysis builds on the German component of a Financial Stability Board (FSB) evaluation project. The project investigated the impact of the Basel III reforms on SME finance and was published in 2019.
Quelle: Basel III and SME bank finance in Germany