Creditworthiness risk (reliability risk)

In general, the risk of default or even insolvency of a debtor. – The risk that securities in the portfolio will be downgraded (plutoed) after purchase and that this will directly or indirectly disadvantage the investor. – In the case of a bank in particular, there is also the possibility that in a credit relationship the borrower may slip into a lower risk category without this deterioration inevitably leading to default. However, the bank has to recognize the receivable from the borrower at a lower value, which has a direct impact on equity. – In the case of a bank, the increase in the cost of funding due to its own declining creditworthiness. – See bid limit, default risk, liability, downrating, factoring, credit event, credit quality, credit risk, credit insurance, liquidity value at risk, risk management, safety margin, forward risk, backing. – Cf. Deutsche Bundesbank Monthly Report of December 2003, p. 56 ff., Deutsche Bundesbank Monthly Report of April 2004, p. 28.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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