14/7/2014: Irish Banks are Open for Lending... when no one is looking?

Remember all the Irish banks advertorials in the media about the lending easing they engaged in when it comes to SMEs? The story, as it is being told by the banks, is that our banking system is approving credit to SMEs and that the SMEs just don't apply or don't draw down the loans approved.

Here is IMF chart from today's Euro area survey on the reasons for adverse outcomes of loans applications:

So we have: Irish banks are refusing loans to SMEs at rates second only to Greece. And applications fall short of business expectations at a rate that exceeds that of Greece, so overall, tightness of credit supply to SMEs in Ireland is just as abad as it is in Greece, and worse than in any other 'peripheral' economy.

But never mind, real cost of capital is now back rising in Ireland, so we can expect some additions of grey bars to the above chart too...

All with the blessing of our policymakers who keep talking about higher and higher margins for the banks...

5/11/2012: Bank credit to SMEs - demand side

My paper with Javier Sánchez Vidal, Ciaran Mac an Bhaird and Brian M. Lucey "What Determines the Decision to Apply for Credit? Evidence for Eurozone SMEs" is available here.

2/3/2012: Lending to Irish SMEs - a pipe dream that keeps piping

A quick thought. RTE reports on CBofI data from the standard banks lending surveys (I can't be bothered to dig through the pile of ECB data files on this right now, so let's take what they have (link here), even though it ain't much.

"Central Bank economists say that the lending conditions imposed by the banks are significantly tougher in terms of collateral requirements, interest rate charges, the size of loans available and the rejection rates. Central Bank Governor Patrick Honahan has said that the authorities have provided unlimited liquidity to the banks at very low interest rates and noted the importance of the SME sector for the economy as the main engine of job creation. ...the Irish Bankers Federation has insisted that banks are lending to SMEs contrary to new central bank research."

So here's a memo to the CBofI front desk:

You (CBofI) spent last 4 years

1. Actively and even preventatively protecting Irish majority-Zombie Banks and larger Investment Firms via regulatory and funding channels, stifling competition and restricting new entries; 
2. You, CBofI, have been incessantly talking about ensuring that the 'banks' are lending into the real economy;
3. You, CBofI, have allegedly 'adequately' recapitalized Zombie Banks for 2011-2013 period under PCARs with so much taxpayers dosh, the country is crocking under the weight of debts;
4. You, CBofI, have actively campaigned to reduce the scope of systemic insolvency resolution, thus, along with (3) above exacerbating investment funds shortages in the country by making sure the 'Banks' capture people's savings into perpetual mortgages & debts repayment scheme;
5. You, CBofI, are running the largest (per supervised institution) sized staff of all NCBs in the euro area and are still hiring new 'talents';
6. You, CBofI, have failed to put in place anything in terms of reforming the banking sector here, other than more protectionism, duopoly, risk de-diversification via geographically targeted deleveraging;
7. You, CBofI, have retained all the staff that was present during the systemic capture of the financial regulation in this country by the very same banks you are now protecting... 

So here's an unpleasant monetary arithmetic the Irish-style:

∑(i=1...7)= Whinging about Toughest Lending Conditions for SMEs in Europe 

What did you guys expect to come out of the above? Healthy, competitive, functional banking and investment sector? Really? I wouldn't call THAT a rational expectation.

PS: I am aware that we have many SMEs in trouble, unable to repay existent debts. But we also have loads of new companies - start-ups and existent enterprises - that can't even get trade finance against clean balance sheets.