Tag Archives: Quantitative easing

Lending to SMEs and entrepreneurs is improving, but more diverse forms of financing are needed – OECD

April 14, 2016 By in Accountability, Austerity, Business Administration, Central banks, Economics, Euro Crisis, Fiscal Policy, People, Politics Tags: , , , , , , , Leave a comment
English: The logo of the Organisation for Econ...

English: The logo of the Organisation for Economic Co-operation and Development (OECD). (Photo credit: Wikipedia)

This is an important new report published by OECD. It highlights that financing for small and medium-sized enterprises (SMEs) has turned the corner from the downswing seen during the global financial crisis, but overall credit conditions remain challenging and access to external finance continues to be much tighter for SMEs than larger firms.

Source: Lending to SMEs and entrepreneurs is improving, but more diverse forms of financing are needed – OECD

I was disappointed that the report was not more critical of the major banks who despite all sorts of inducements have failed to leverage loans to SMEs. This is important because typically SMEs generate new jobs more quickly than larger firms.

What the report highlighted for me was the importance of government guarantees. Significantly, France with a socialist government and generally not friendly to entrepreneurs, we find surprisingly high government guarantees. By comparison, in the UK and Southern Europe government guarantees for SMEs are negligible. Part of the problem seems to be the monetary policy and fiscal policy are not coordinated effectively.

In my mind SMEs generally get a raw deal compared to big business. Big business has more effective political lobbying. Governments seem to rely on intermediaries in dealing with SMEs. Most importantly, there seems to be an absence of an effective industry strategy.

Thoughts?

 

The Hidden Debt Burden of Emerging Markets by Carmen Reinhart – Project Syndicate

October 15, 2015 By in Business Administration, Economics, Fiscal Policy, Growth, Immigration, People, Politics Tags: , , , , , , , , , 1 Comment
English: Emerging Markets without China and India

English: Emerging Markets without China and India (Photo credit: Wikipedia)

This is an insightful article by leading economist Carmen Reinhart. She claims that as central bankers and finance ministers gather for the IMF’s annual meetings in Lima, the emerging world is rife with symptoms of increasing economic vulnerability. Reinhart points out that some of those symptoms, like slowing growth, are obvious and quantifiable – but others are dangerous partly because they are difficult to discern.

Source: The Hidden Debt Burden of Emerging Markets by Carmen Reinhart – Project Syndicate

On the surface, the emerging markets are suffering because of slower growth in China and weak commodity prices. However, this article looks at the risk of bilateral loans from China to the developing world.

For another excellent insight into the risks in emerging markets, take a look at this latest viewpoint from the Economist.

Ultimately, I guess it all depends on the economic outlook for China – personally, I’m optimistic.

Thoughts?