Is bank lending the answer to all problems?

Rhetorical question.

In a presentation at the Dutch ‘Economists’ Day’, I argued that

  • The system of lending and money creation can become ‘self-inflatable’;
  • The revival of (gross) bank lending has, so far, mostly been in mortgages. Little movement in lending to finance inventories or investment;
  • Eurozone countries are already highly dependent on bank financing;
  • More generally, debt levels are still very high, is it really wise to stimulate economic agents to take on more?
  • isn’t the (relative) lack of risk-bearing capital a more pressing issue?
  • Even more generally, access to finance is no longer the biggest worry entrepreneurs have.

See the slides below:


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