A scientific study only just published commissioned by the German Federal Association of Small and Medium-sized Businesses (BVMW) warns against negative consequences for German small and medium-sized companies of the planned equity capital regulations for banks (Basel III) currently being discussed by the Basel Committee on Banking Supervision. What researchers at Berlin’s Humboldt University and the Bergische Universität Wuppertal criticise is that the planned flat-rate increase in equity ratios will be disadvantageous primarily for bank lending to small and medium-sized companies. The reason: the banks’ credit business has to bear a total of two-thirds of the additional capital requirements, whereas the essentially riskier commercial business only a third. In the opinion of the economists this risk weighting is unrealistic and ultimately unfair, because it ascribes too high a risk to company loans, thus making them unnecessarily expensive.
In order to be able to gauge the impact of Basel III on bank lending to small and medium-sized companies, the study analyses the Basel III proposals in a simulation model. The outcome: the likeliest scenario is a 2.47 per cent reduction in the lending volume and a 0.54 per cent increase in average interest costs by 2019. Based on these results the scientists calculate that the introduction of Basel III in the form planned by the Basel Committee and the EU Commission will entail a 2 per cent reduction in the total turnover and revenue of German small and medium-sized companies.