BPI Submits SME Financing Evaluation to FSB

BPI Submits SME Financing Evaluation to FSB

On March 21, BPI submitted a comment letter to the Financial Stability Board on the effects of financial regulatory reforms on the provision of financing to small- and medium-sized enterprises (SMEs).  The letter presents evidence to show that post-crisis regulatory reforms have significantly curtailed the provisioning of credit to SMEs, with the largest demonstrable impacts in the U.S. appearing to result from the implementation of stress testing and the GSIB capital surcharge framework, the latter of which was developed as an international standard, although it has been implemented more stringently in the U.S.  The letter also notes that, while other nonbank institutions may have increased the supply of credit to SMEs in the post-crisis period, research has shown that there is a significant net reduction in the supply of credit to SMEs.

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The views expressed do not necessarily reflect those of the Bank Policy Institute’s member banks, and are not intended to be, and should not be construed as, legal advice of any kind.