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Master's Thesis from the year 2013 in the subject Economics - Finance, grade: 1, University of Applied Sciences Coburg, language: English, abstract: Management SummaryIn response to the recent financial and ensuing economic crisis of 2007-2008, the Basel Committee on Banking Supervision announced a new set of measures - Basel III, which ought to create a more resilient banking system. It also intends to help contain adverse effects of financial system from spilling over to real economy. This, in turn, will allow real sector of economy avoid potential credit disruptions in future.However, just…mehr

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Master's Thesis from the year 2013 in the subject Economics - Finance, grade: 1, University of Applied Sciences Coburg, language: English, abstract: Management SummaryIn response to the recent financial and ensuing economic crisis of 2007-2008, the Basel Committee on Banking Supervision announced a new set of measures - Basel III, which ought to create a more resilient banking system. It also intends to help contain adverse effects of financial system from spilling over to real economy. This, in turn, will allow real sector of economy avoid potential credit disruptions in future.However, just as a coin has two different sides, Basel III might also have unintended adverse effects on real sector. Therefore, this research is addressed at analyzing possible effects of the new regulations on corporate financing.Through review of relevant literature, we have been able to identify the most significant researches in the area to date. On one hand, advocates of Basel III argue for a substantial net economic advantage of around 2.6 per cent of annual GDP increase as a result of implementation and imply that society will be better off as a result. On the other hand, there are a number of critics, who state that prescribed tighter and liquidity requirements will create a two-side pressure on RoE of banks, prompting these to allocate less capital to lending business - thus decreasing credit, available to real economy.As a result, after conducting two case-studies: one a bank and another on a non-financial corporate, it has been determined that, on one hand, larger banks, using market leadership position, relatively bigger size and also given efforts, directed at reduction of operational costs will be able to limit price increase of most of commercial banking products. On the other hand, it is defined that this is the right time for non-financial corporates for a wider direct financial market participation. In general, this paper extends support for the new banking regulations given a proper implementation.As a closing point, a recommendation on how to best perform this strategic shift from traditional banking products to financial market products was proposed.Keywords: Basel III, corporate finance, strategy tools