## What is loan equivalent value?

The practice of translating so-called off-balance sheet commitments, such as swaps and other financial instruments, into the credit equivalent exposure represented by a loan.

**What is LEQ in credit risk?**

In this article, loan equiv- alent exposure (LEQ) is defined as the portion of a credit line’s undrawn commitment that is like- ly to be drawn down by the bor- rower in the event of default.

**What is the purpose of a credit conversion factor?**

The credit conversion factor (CCF) converts the amount of a free credit line and other off-balance-sheet transactions (with the exception of derivatives) to an EAD (exposure at default) amount. This function is used to calculate the exposure at default.

### What is Leq finance?

The probability of drawing the undrawn portion in the next 12 months is defined as the loan equivalency factor (LEQ) off balance sheet.

**What is loan equivalent risk?**

Loan Equivalent Risk (LER) limit is sanctioned to Corporates for potential fluctuation in the contractual currency of a foreign exchange transaction (forward / option) undertaken over the transaction’s stipulated time period, as determined using the historical volatility of the contractual currency.

**What is CCF in Basel?**

The credit conversion factor calculates the amount of a free credit line and other off-balance-sheet transactions (with the exception of derivatives) to an EAD amount and is an integral part in the European banking regulation since the Basel II accords.

#### What is ler limit in banking?

**What is the LEQ in a loan?**

The LEQ is defined as a ratio of the change in the amount drawn at default to the current undrawn commitment, which can be expressed as.

**What is the Leq for revolving credit facilities?**

Araten and Jacobs (2001) estimated LEQ for revolving credits and advised lines from JPMorgan Chase. The au-thors used 408 facilities covering the period 1995 to 2000. The data showed an increasing trend of average LEQ for best rated grades (for example, AAA/AA- to A+/A-) and a decreasing trend for the worst ones.

## Does Leq increase or decrease with higher ratings?

Based on peer research, including that of Araten and Jacobs, this article argues that LEQ rises with increasing ratings for the better grades and decreases for the worse ones. This finding reflects the competition between banks and borrowers with regard to the drawdown of the unused commitment.

**What is Leq in noise measurement?**

Leq is often described as the average noise level during a noise measurement, which although not technically correct, is often the easiest way to think of Leq. If the noise is varying quickly, the average energy over a period of time is a very useful measurement parameter.