The government seized Superior in 2000 after it collapsed because of poor lending practices and shoddy bookkeeping.
Guarantees create moral hazard and foster poor lending standards.
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Tarrin is accused of engineering the Finance Ministry's takeover of Krung Thai Bank from the Financial Institutions Development Fund in the wake of last year's leak of a PricewaterhouseCoopers audit report that exposed allegedly poor lending practices at the bank.
The Community Reinvestment Act, for example, requires banks to invest a certain portion of their lending in poor areas.
On the face, its business model is similar to Grameen's, operating in Bangladesh, which focuses on lending to poor women.
The problems of Asia's financial firms are due not to too much competition, but to over-protection and cronyism, which have encouraged shoddy lending and poor cost-control.
As many international micro finance institutions have demonstrated (although not yet proven nationally), lending to poor people can be a sustainable strategy as these nontraditional institutions get repaid and repay investors. (Note: Microfinance institutions are a subset of CDFIs in the United States).
Lending pigs to poor farmers as a sustainable source of income.
Let's examine how "true free-market capitalism" would address lending to the poor, and the potential of investors profiting off of a commercial endeavor with that mission.
But just as important, Renee, maybe more important, the governments are telling these banks with extra cash that if they go ahead and start lending to the poor banks again, the government will guarantee those loans.
The sub-prime lending market - worth billions of pounds - involves lending to people with poor credit records at an interest rate premium.
However, commentators said the promises on education were vague, with the most specific proposal being for multinational lending bodies to allow poor countries to replace some debt repayments with spending on education.
At Lending Club, borrowers with poor credit are excluded and therefore interest rates are lower.
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Banks have responded to declining credit quality by increasing the gap between the price of lending to good borrowers and poor ones.
Alimanovic's transformation to entrepreneur was made possible by microfinance--the lending of small sums to poor people who would otherwise be shut out of access to capital.
Today, traditional lending institutions largely ignore the poor.
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They have far too much to do at home: double the size of their business every five years or so, avoid bad debts, find more capital, cope with rapidly shifting patterns of corporate lending, bring banking to millions of poor people and deal with the politicians.
They are still gun-shy about borrowers with poor credit quality and weak assets, but they are very intent on lending to strong borrowers with good properties as collateral.
The bank said the poor results were due to the global crisis and it regretted some of the lending decisions made.
But, as the report points out, the fact that there are poor people in a country with such access does not self-evidently justify lending by the Bank.
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