Since the 2008 Global Financial Crisis the policymakers that govern banking regulation have prioritised the stability of the global banking system, as it has been shown that general economic wellbeing and society benefits from strong financial institutions . For business lending, which is more complex, has larger loan values, and is deemed to carry higher risk, by ratcheting up the Risk weighting of all business lending under Basil legislation.

I’m not suggesting this is wrong – we all need a secure banking system – no question. But there have been unintended consequences of the new regulatory direction for banks under Basel. Risk Weighted Assets (RWA) changes for business credit has consequences for the working capital strength of businesses large and small, and by extension for macroeconomic and societal outcomes: consequences that have not been considered in the legislative policy.

A couple of weeks ago I published an article of the same name, the result of my research on the topic. check it out here:

Makes for interesting reading as to what banks lend. But it does not explain why bank balance sheets are trending this way.

I sat down with Alan Beattie and Alex Twigg, career bankers and discussed why banks don’t lend more to businesses. Listen, enjoy, tell us what you think.

This conversation is AI talking about what we do at Trade Ledger.