Leasing Companies in the Czech Republic from the Perspective of Basel III Regulation
Leasing Companies in the Czech Republic from the Perspective of Basel III Regulation

Author(s): Martin Svítil
Subject(s): Business Economy / Management, Evaluation research
Published by: Masarykova univerzita nakladatelství
Keywords: Leasing; Basel III; capital; regulatory capital;
Summary/Abstract: The aim of the paper is to evaluate the situation of leasing financing providers (leasing companies) against the rules of capital adequacy, especially the newly prepared rules of 2017 Basel III regulatory framework (sometimes called Basel IV), that should enter into force between 2022 and 2027. In the first part, the article summarizes the opinion of leasing companies associated in the European Federation of Leasing Company Associations Leaseurope on the new capital adequacy rules of Basel III. This opinion is based on the theoretical basis of risk management (especially credit risk) in leasing, as well as on several empirical studies conducted with real data sets. These studies and their results are discussed in more detail in the article. The results clearly show that the risk associated with the provision of foreign capital through leasing is significantly lower than the risk calculated by the capital adequacy calculation for Basel III rules. This is confirmed by several other sources mentioned in the text. The second part of the article focuses on the situation in the Czech Republic. It is based on publicly available data on the largest leasing companies operating on the Czech market and shows the state of their capital adequacy on simplified indicators of the ratio of Equity / Balance sheet total and Equity / Receivables.

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