A Comparison of Businesses’ Financial Crediting Practices in Taiwan area to Norms for New Basel Capital Accord (Basel II)-Take an Old Privately-Operated Bank as the Example-

• Main Authors: Hsiao-Meng Huang, 黃曉夢
• Other Authors: 丘駿飛
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/09828785740032094954

碩士 === 元智大學 === 管理研究所 === 94 === New Basel Capital Accord (Basel II) will be implemented in Jan 2007. Basel II has a better call for risk weighing and provides a wider range of factors to be taken into account. Also, Basel II has effectively proposed a better catering to the ratio of risk assets with self capita l withdrawal. Basel II initially targets on regulating international banks; for now it is suitable for banks all over the world. For domestic banks in Taiwan, the crediting is divided into two parts of consuming financial and business financial. The credit risk factors for consuming financial have been emphasized on both quality and quantity instead of quality only at past times. However, the credit risk factors for business financial are still focused on quality only. The reason is not out of banks but limited to the realistic environment in that the rate of medium and small businesses is very high. Loans from such businesses are the major profits of banks, but their financial statements are mostly veered away the truth. In order to follow through the market competence, banks are forced to accept the existing facts. The approaching implementation of Basel II has three pillars. The first pillar states that the banking risks should be classified as credit risk, operational risk and market risk. The credit risk emphasizes on realistic quantity, which is prevailingly hard to get into practice for domestic banks. To carry out credit risk weighing on quantity factors requires changes in outer circumstances and build-up of the management information system in a bank itself. This essay utilizes the method of case analysis. The subject is an old privately-operated bank in Taiwan. It is found that the crediting policy of the bank is very traditional and a long way off the standards stipulated by Basel Committee on Capital. There is much to be desired for the bank. Provided that the condition of disregarding business’ financial statements is not improved, it is hard for the bank to meet the requirements of Basel II. While Basel II has a broad range of norms, this essay makes a comparison from the view of current crediting practices among banks to the regulated credit risk in Basel II.