The internal ratings-based (IRB) approach is better at determining risk for retail credit than the standardized approach. By using data sets and logistic regression, it was found that the IRB approach allocates more capital to riskier exposures and less to safer ones. The current design of the Basel III output floor may discourage the use of the IRB approach, but simple adjustments could address this issue. This study is valuable as it compares risk sensitivity in regulatory capital for retail credit, an important area for banks, and raises concerns about the upcoming implementation of the output floor.