Abstract:

(Possible Effects of Basel II on SME Finance: A practice on Gaziantep) Small and medium sized enterprises (SMEs) are considered as one of fundamental sources of the growth in economies. Like advances in international financial system, changes in regulations about economic activities also have great impact on SMEs. In near future, the most important change will be the execution of Basel II grading criteria. Basel II criteria intends to measure risks that banks especially faces and to use these risk measurements within the risk management process. These polemical regulations will also affect SMEs and will increase the financing problems of them. Because, credit pricing approach, which focuses on risk, considers credit type, guarantee fund, firm’s credit grade andmore criteria. According to evaluations, defines the amount and price of the credits. From this point of view, Basel II criteria will have great impact on SMEs which still can’t benefit enough from capital and money markets.This paper examines the possible impacts of Basel II applications on SME finance. At first within the relationship of Basel II and SMEs the new standards about capital adequacy and risk management will be examined. In practice section, a survey is conducted and applied to SMEs located in Gaziantep. With the survey results, the perspective of SMEs for Basel II criteria and actions they need to take within this process will be analyzed.

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