The Financial Crisis 10 years on – What have we learned?
Ten years ago, failure of financial systems caused crisis and a economic disaster.
Since the crisis, the Bank of England has been building a safer system supported by 2 factors –
First, it has been given responsibility for the supervision of individual banks and building societies.
Second is the creation of an authority in the Bank with new powers – the Financial Policy Committee – tasked by Parliament to monitor risks in the financial system that could cause problems for the wider economy.
• Banks are now disciplined by a leverage ratio. This protects the system from risks and uncertainties that are hard to measure through risk weights and models.
• Large banks are taking fewer risks trading in financial markets.
• Banks are less dependent on each other – interbank lending has fallen by two thirds since the crisis.
• The Bank of England’s first line of defence involves supervision of banks and building societies.
• Second line of defence is to stress test lenders to make sure they have the strength to deal with very severe recessions without cutting back on lending.
Banks are less dependent on short term wholesale market funding which has fallen from 25% of total funding in 2006 to just 10% now.
By now, financing options for all stages of the small-business cycle can be somewhat limited although definitely more achievable through working with an independent financial broker.
Typically, start-ups and unprofitable companies have relied on credit cards and home equity loans.
As their businesses begin to thrive, they might often turn to bank credit lines. And when it’s time for the next big growth spurt, they usually get a small-business loan.
Why not contact JB Commercial Finance today and discuss your options!