Like no other art form, the novel confronts its readers with circumstances arising from their own environment of social and historical norms and stimulates them to assess and criticize their surroundings. By analyzing major works of English fiction ranging from Bunyan, Fielding, Scott, and Thackeray to Joyce and Beckett, renowned critic Wolfgang Iser here provides a framework for a theory of such literary effects and aesthetic responses.

Iser's focus is on the theme of discovery, whereby the reader is given the chance to recognize the deficiencies of his own existence and the suggested solutions to counterbalance them. The content and form of this discovery is the calculated response of the reader -- the implied reader. In discovering the expectations and presuppositions that underlie all his perceptions, the reader learns to "read" himself as he does the text.

This digital document is a journal article from Journal of Banking and Finance, published by Elsevier in 2006. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
This paper aims at improving our understanding of internal risk rating systems (IRS) at large banks, of the way in which they are implemented, and at verifying if IRS produce consistent estimates of banks' loan portfolio credit risk. An important property of our work is that the size of our data set allows us to derive measures of credit risk without making any assumptions about correlations between loans, by applying Carey's [Carey, Mark, 1998. Credit risk in private debt portfolios. Journal of Finance LIII (4), 1363-1387] non-parametric Monte Carlo re-sampling method. We find substantial differences between the implied loss distributions of two banks with equal ''regulatory'' risk profiles; both expected losses and the credit loss rates at a wide range of loss distribution percentiles vary considerably. Such variation will translate into different levels of required economic capital. Our results also confirm the quantitative importance of size for portfolio credit risk: for common parameter values, we find that tail risk can be reduced by up to 40% by doubling portfolio size. Our analysis makes clear that not only the formal design of a rating system, but also the way in which it is implemented (e.g. a rating grade composition; the degree of homogeneity within rating classes) can be quantitatively important for the shape of credit loss distributions and thus for banks' required capital structure. The evidence of differences between lenders also hints at the presence of differentiated market equilibria, that are more complex than might otherwise be supposed: different lending or risk management ''styles'' may emerge and banks strike their own balance between risk-taking and (the cost of) monitoring (that risk). han might otherwise be supposed: different lending or risk management ''styles'' may emerge and banks strike their own balance between risk-taking and (the cost of) monitoring (that risk). ear that the calibration of the Basel risk weight mappings and banks' internal borrower risk rating systems are not yet synchronized in a way that they result in consistent estimates of portfolio credit risk for regulators.