Housing loan risk weights affect banks’ capital adequacy
Haajanen, Jyrki (09.06.2015)
JulkaisusarjaBank of Finland. Bulletin
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-201506101289
Risk weights help to establish each bank's minimum own funds relative to lending, ensuring the bank's ability to cover the related credit risk. The risk weight calculation method chosen by the bank may have a significant effect on capital requirements and ultimately on the price of credit. A harmonised calculation of housing loan risk weights would support fair competition between banks.