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

CROMWELL TRADES STEADILY IN FIRST HALF

CROMWELL Property Group has maintained a steady operating profit at $0.045 per security in the first half of FY17,...

WHY NEXTDC'S STOCK IS SOARING

AFTER posting its interim result, NEXTDC (ASX: NXT) gained more than 12 per cent on the stock market before noon.
...

PWR PROFIT CRASHES AS DOLLAR RISES AND COSTS MOUNT

A RISING Aussie dollar has offset PWR Holdings Limited's (ASX:PWH) overseas growth in the last half, forcing a...

SUPER RETAIL GROUP RESULTS SHINE ACROSS THE BOARD

A WELL-planned and executed half has paid off for Super Retail Group (ASX:SUL) as it posts a net profit result up ...

Related News

EVERYTHING YOU NEED TO KNOW ABOUT THE NATIONAL BROADBAND NETWORK

THE National Broadband Network (NBN) is more than an internet connection, it is an opportunity to transform your b...

WHY EMPLOYEE-OWNED COMPANIES ARE BEATING ASX200 SHARE PRICES

EMPLOYEE-owned companies command a higher share price than their publicly listed peers, reaping a 17 per cent prem...

RISE OF THE MACHINES HAS WORKERS SWEATING

UP TO 3.8 million Australian workers are fearful their job may soon be terminated by a robot, a new survey has shown....

LESS TALK, MORE SMALL BUSINESS ACTION IN 2017

THE future growth and prosperity of Australian SMEs could be undermined if governments lose sight of the sector...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter