IDEAS home Printed from https://ideas.repec.org/a/ids/amerfa/v1y2009i4p408-431.html
   My bibliography  Save this article

Effects of Basel II standards on small-medium size enterprises: evidence from the Istanbul Stock Exchange

Author

Listed:
  • Mustafa Kemal Yilmaz
  • Ali Kucukcolak

Abstract

Rapid development in international financial markets lead regulatory bodies to establish common supervisory standards. On this respect, Basel II capital adequacy standards bring some obligations to the banks for effective supervision and risk management and force small-medium size enterprises (SME) to establish a sound corporate structure for financing their operations and managing their risks. This study discusses the effects of Basel II standards on SMEs in Turkey, focusing mainly on non-financial companies traded in the Istanbul Stock Exchange (ISE). The results reveal that the banks in Turkey should vary their evaluation standards in conformity with the Basel II in extending credits to the companies for effective risk measurement. By the end-of-year 2005, about 50% of the non-financial companies traded in the ISE are within the scale of SMEs, as defined by the Basel II. The findings reveal that many of the SMEs have difficulties in using credits from banks and in employing corporate governance principles effectively. They use high-level real estate collateral in getting credits from banks. Thus, they may experience problems in getting appropriate credit rating and low-cost credits during the transition period, unless they take necessary actions to improve their corporate structure and use effective risk management techniques.

Suggested Citation

  • Mustafa Kemal Yilmaz & Ali Kucukcolak, 2009. "Effects of Basel II standards on small-medium size enterprises: evidence from the Istanbul Stock Exchange," American Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 1(4), pages 408-431.
  • Handle: RePEc:ids:amerfa:v:1:y:2009:i:4:p:408-431
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=31776
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:amerfa:v:1:y:2009:i:4:p:408-431. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=229 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.