- Banks as a lender — Regulation of banks — Credit risk — Capital markets — Financial regulation
This chapter examines the regulatory impediments to financing by European banks of corporate borrowers and the means to improve the financing capability of banks. In this context, it not only looks at banks, but also considers the position of another type of a highly regulated funder: European insurance companies. The working assumption is that capital requirements, and risk weights for credit risks in particular, have an impact on the capability of banks to lend. Quite simply, a higher risk weight of an exposure increases the capital a bank needs to maintain in connection with such exposure. As a result, increases in capital requirements will potentially constrain the lending capability of a bank.
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