Loans to SMEs should have lower capital requirements – BdF paper
More SME lending boosts banks’ portfolio diversity and decreases systemic risk exposure, paper finds
A working paper published by the Banque de France looks at an initiative to encourage eurozone banks to lend more to small and medium-sized enterprises (SMEs).
In Lower bank capital requirements as a policy tool to support credit to SMEs, Michel Dietsch, Henri Fraisse, Mathias Lé and Sandrine Lecarpentier examine a 2014 policy by the European Commission. The EC brought in a 25% reduction in banks’ own funds capital requirements against the loans they made to SMEs.
The authors compare the
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