MacroScope is pleased to post the following from guest blogger
Ian Bright. Bright is senior economist at ING and winner of the
2008 Rybczynski Prize from the UK Society of Business
Economists. He says here that bank lending’s future can be seen
in Japan’s past — and it is not good for the would-be borrower.
“There is anger in many countries that banks are not lending
money. Or more correctly, they are lending less than people
want. There is nothing new in this. Even before the failure of
Lehman Brothers and the collapse of the global financial system,
banks were tightening lending criteria. We even saw people who
paid off their credit cards each month have them withdrawn.
Small companies found that the criteria used to value the assets
backing loans were made more onerous. When the financial system
virtually collapsed, governments provided money and central
banks lowered rates. Many thought that this would increase the
ability to get loans from banks. Indeed some governments made
efforts to link the provision