Credit issue lingers

Written on the 15 September 2010

WHILE it is generally assumed that Australia sailed through the GFC unscathed, a lasting after-effect is the contraction in credit, particularly in the business and property development sectors.

According to a Midwood Report, credit growth was less than 1 per cent per annum in 2009, compared to 15 per cent per annum before the GFC.

Private investment is being severely constrained, and while public investment has taken up part of the pie, job growth, particularly in the housing sector, has been negligible.

The Midwood Report’s Bill Morris says the solution is not easy, because the credit contraction has been caused by the general shortage of credit around the world, hence the higher cost of credit.

Morris says a solution is to lower the required capital adequacy ratios of the top four banks (currently 8 per cent capital to assets) to 6 per cent for a limited period, in order to free up more capital for lending to specific economic sectors.

This would need to be assessed by the Reserve Bank in terms of liquidity and risk, but there is a desperate need for more liquidity in the private investment market.


Latest News

2017 BRISBANE TOP COMPANIES REVEALED

WHILE Queensland is regarded as an economy in transition with the winding down of the mining boom, the 2017 top 50...

2017 BRISBANE TOP COMPANIES 1-10

FROM insurance and banking to travel, gambling, retail, property and pizza, these "heavyweights" have ha...

2017 BRISBANE TOP COMPANIES 11-20

RETAIL, property, an airline, cars, real estate, software services, energy, agriculture, veterinary services bathr...

2017 BRISBANE TOP COMPANIES 21-30

JEWELLERS Michael Hill International listed in 2016 with a half-billion dollar market capitalisation and a new CEO...

Related News

FURNITURE DISRUPTOR SET TO SHARE HIS ONE OF A KIND BUSINESS MODEL

IT'S no secret that Australians love homemaking. Their ceaseless quest to create the perfect place to call hom...

WEEDING OUT THE ASX'S BURGEONING CANNABIS TREND: 8 COMPANIES TO WATCH

A NICHE is budding on the ASX in the form of medical cannabis, an industry which has been on the country's rad...

FRESH CLASS ACTION TO REVEAL ANOTHER SIDE OF SLATER AND GORDON DOWNFALL

ACA LAWYERS has issued a formal letter of demand to Andrew Grech (pictured), managing director of Slater and Gordo...

STARSHIPS WERE MEANT TO DELIVER DOMINO'S PIZZA

NICKI Minaj may have been off the mark when she declared 'starships were meant to fly'. However, she m...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter