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Article
The Impact of Capital Requirements on Companies’ External Financing
Author(s)
Günter Hofbauer, Monika Klimontowicz, Aleksandra Nocoń
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DOI:10.17265/1548-6583/2017.01.002
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ABSTRACT
The new prudential standards implemented by the Basel Committee treat banks’ capital as a foundation for safety. The appropriate level of bank’s capital helps to manage all kinds of risks with the special attendance on credit risk. The adequate capital base enables absorbing losses and maintaining bank’s stability. The necessity to fulfill the capital requirements influences banks’ credit policy and, as a result, the access to companies’ external financing. The main purpose of the paper is to present the impact of the capital requirements implemented by Basel Committee (Basel III requirements) on companies’ access to external finance. The paper discusses the changes in credit standards, the companies’ external financing and formulates the prerequisites for the further development of companies’ external financing. The paper contains the empirical data for largest European euro area countries regarding the GDP.
KEYWORDS
equity regulations, capital adequacy, companies’ external financing, credit standards
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