Credit Risk Management Methodology According to Basel III Accords An Applied Study on the Egyptian Banking System

Abstract

Credit risk management is considered as a fundamental issue in the process of financial risk management. Banking and financial industry pay greater attention to the credit risk analysis and risk assessment due to the financial turmoil and the changes in the regulations introduced by Basel III. A combination of capital and liquidity standards has been introduced by Basel III, which aims at increasing the resilience of the financial sector against crisis and stress. Basel III Accord combines enhancements of both the micro and the macroprudential level. At the micro level of financial institutions, it adds some improvements, including strengthening the quality and the level of capital. At the macroprudential level, Basel III promotes the greater stability of the financial system by establishing the appropriate capital level to address the procyclicality of the financial system and to deal with systemic risk.