Loss Given Default - Empirical observations and models

In times of implementation of Basel II Approach andfinancial crisis the importance of Loss GivenDefault (LGD) as a measure of expected losses by defaultof banks companies corporations etc. will increaserapidly. The understanding of central statisticalcharacteristics of LGD will help the Banks HedgeFunds and other Lending Parties to forecast andmeasure the potential losses if a company goesbankrupt. For its prediction should be created newaccurate mathematical and risk management models andtherefore the involving parties should have moreempirical observations from the past and study theexisting models in that area.