Business loan

How Banks are running our economy

How Banks are running our economy

This week's findings at the Financial Services Royal Commission reminds me of an insightful analysis by Alan Kohler in The Australian two years ago on what is holding business back and the negative effects on our economy. Sadly, our policy-makers seem to be disconnected from the reality of how to manage our economy.

“Banks are basically not lending to those who don’t own a house or are already fully committed on their mortgages, and those who are building houses for investors.

So they are going elsewhere and paying 10-15 per cent more in interest than the banks would charge, except they’re not.

It means the divide between the haves and have-nots (a house, that is) has never been this great.”

Small Business Lending by Banks remains in the Doldrums, holding back wages and jobs growth

Small Business Lending by Banks remains in the Doldrums, holding back wages and jobs growth

The latest figures on Business Lending from the Reserve Bank of Australiashow that only 10% of new loans in the year to September 2017 were made to SMEs, a growth rate of 4% pa.

Larger loans, mainly to corporates (although not clearly segmented by the RBA sadly), increased by 16% over the same period and accounted for 90% of new loans.