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Abstract
The objective of this paper is to analyse the impact on developing countries of changes in credit risk measures found in Pillar 1 of the new Basel Agreement. The main conclusion of the paper is that the repercussions of the new measures will be negative for developing countries and may cause a large scalecrisis. In 1999 the Basel Committee on Banking Supervision presented a new proposal titled “New Framework for Capital Adequacy.” The new proposal is supported by three main elements called pillars. Pillar 1 treats the minimum capital rules, which are based on weights. Those new rules are supposed to be more appropriate to economic risk than the rules of the previous (1988) Basel Agreement were.
Key words: Basel Agreement, financial regulation, credit risk.
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